INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (this "Agreement") is made this 28th day of
April, 1999, among (i) JPE, Inc., a Michigan corporation ("JPE"), and (ii) ASC
Holdings LLC, a Michigan limited liability company ("ASC"), and Kojaian Holdings
LLC, a Michigan limited liability company ("Kojaian") (ASC and Kojaian,
together, "Buyer"). All capitalized terms used in this Agreement are either
defined or referenced in Section 1 below.
RECITALS
A. JPE and the Subsidiaries are in the business of, among other things,
developing, manufacturing, marketing and selling automotive components and parts
to original equipment manufacturers and the after market.
B. Buyer desires to invest in companies in the business of JPE and the
Subsidiaries.
C. Each of Buyer and JPE desire that Buyer invest in JPE by subscribing for
and purchasing 9,441,420 newly issued Common Shares and 1,560,000 newly issued
Preferred Shares (subject to certain adjustments) on the terms and conditions
provided in this Agreement.
D. In connection with Buyer's investment in JPE, each of JPE and Buyer
desire that JPE issue to the holders of the common shares of capital stock of
JPE on the Record Date, Warrants to purchase, on an aggregate basis, up to
345,163.50 Preferred Shares on the terms and conditions provided in this
Agreement.
E. In connection with Buyer's investment in JPE, each of JPE and Buyer
desire that JPE, Buyer and the Bank Group enter into one or more agreements by
which, among other things, some or all of the proceeds of Buyer's investment in
JPE be used (with certain other funds) in the complete and final payment of the
Debt on such terms and conditions as provided in such agreement (collectively,
the "Bank Agreement").
F. In connection with Buyer's investment in JPE, the parties have agreed to
take certain other actions, all as described in this Agreement and in the
Related Agreements.
G. The Board of Directors of JPE and the members of each of ASC and Kojaian
have approved the Transaction upon the terms of this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Definitions. As used in this Agreement:
"Accountants" is defined in Section 3.3(b) of this Agreement.
"Accounts Receivable" means all accounts and notes receivable of the
JPE Companies determined in accordance with GAAP and reflected on the books
and records of the JPE Companies.
"Actual EBITDA" is defined in Section 3.3(a) of this Agreement.
"Adjusted Target EBITDA" is defined in Section 3.2 of this Agreement.
"Affiliated Group" means any affiliated group as that term is defined
in Code Section 1504(a) or any similar group.
"Aggregate Warrants Exercise Price" is defined in Section 3.1(a)(i) of
this Agreement.
"Agreement" means this Investment Agreement.
"Alternative Acquisition" means any tender or exchange offer, any
proposal for a merger, consolidation or other business combination with any
JPE Company, any proposal or offer to acquire in any manner an equity
interest of 50% or more in any JPE Company, or any proposal or offer to
acquire 50% or more of the business or Assets of any JPE Company by a party
other than Buyer.
"Approvals" means all zoning approvals and permits, environmental
approvals, Environmental Permits, wetlands approvals, utility service and
capacity permits, building permits and all other permits, licenses,
approvals and authorizations required to allow the use of each Property in
the manner currently used by JPE and the applicable Subsidiary.
"ASC" is defined in the introductory paragraph of this Agreement.
"ASC Owners" is defined in Section 7.4(a) of this Agreement.
"Assets" means all of the assets of the JPE Companies, including
Inventory, Accounts Receivable, Properties, Proprietary Rights and all
other real, personal and intangible property of the JPE Companies, whether
owned, leased or otherwise held by the JPE Companies.
"Bank Agreement" is defined in Recital E of this Agreement.
"Bank Discharge" is defined in Section 4.1 of this Agreement.
"Bank Group" means all of the holders of the Debt (including, but not
limited to GMACBC and all holders of the Debt for which Comerica Bank acts
as agent); provided, however, that the "Bank Group" shall exclude GMACBC
for all purposes under Section 4 of this Agreement.
"Bank Group Subscription" is defined in Section 4.1 of this Agreement.
"Bankruptcy Courts" means those federal bankruptcy courts possessing
jurisdiction In the Matter of Plastic Trim, Inc., Case No. 98-56104, and In
the Matter of Starboard Industries, Inc., Case No. 98-56099.
"Buyer" is defined in the introductory paragraph of this Agreement.
"Buyer's Consultant" is defined in Section 9.6(a) of this Agreement.
"Buyer's Due Diligence Investigation" is defined in Section 9.5 of
this Agreement.
"Champion Costs" is defined in the definition of Working Capital.
"Closing" means the consummation of this Transaction (other than the
transactions to occur on the Record Date or the Delivery Date).
"Closing Date" is the date on which the Closing takes place.
"Closing Financial Statements" is defined in Section 8.11 of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended (or any
successor thereto).
"Common Shares" means the shares of JPE common capital stock.
"Common Shares Subscription Price" is defined in Section 2.1 of this
Agreement.
"Debt" means the total outstanding debt obligations of the JPE
Companies (whether or not accelerated) for borrowed money including but not
limited to principal, accrued interest, prepayment penalties and charges
and other amounts due and owing in respect thereof; all such debt
obligations are set forth on Schedule 5 to this Agreement.
"Deferred Intercompany Transaction" has the meaning set forth in
Treasury Regulation Section 1.1502-13 of the Treasury Regulations in effect
before July 12, 1995.
"Delivery Date" means the day after the Record Date.
"Divested Subsidiaries" is defined in Section 8.30 of this Agreement.
"Divestitures" is defined in Section 8.31 of this Agreement.
"EBITDA" means for any period, the consolidated net income (loss) of
the JPE Companies for such period determined in accordance with GAAP
consistently applied and following all accounting principles, practices and
methods (to the extent in compliance with GAAP) set forth in the audited
financial statements of the JPE Companies consistently applied, plus,
without duplication, all amounts deducted in determining such net income on
account of (1) interest expense, (2) income tax expense or any expense for
income taxes for any other party other than the JPE Companies, (3)
depreciation and amortization expense, (4) any amounts paid or accrued by
JPE with respect to the Champion Costs to the extent the Champion Costs are
included in the calculation of the net income of the JPE Companies, (5) any
management or consulting fees paid to Buyer, any affiliate of or entity
related to Buyer, in excess of the sum of (a) $250,000, per year, plus (b)
two percent (2%) of EBITDA (calculated first without this item) in excess
of $32 million for the EBITDA Period, (6) all Transaction Costs to the
extent included in the calculation of the net income of the JPE Companies,
(7) write-offs of goodwill in excess of normal amortization, (8) net
changes in the aggregate Asset values resulting from purchase accounting
for the Transaction that would otherwise negatively affect the calculation
of EBITDA, (9) any costs attributed to employee benefit plans to the extent
arising from the fact that such plans are part of a controlled group in
respect of employees other than those of the JPE Companies, and (10) any
amount paid to The Bank of Nova Scotia pursuant to the guarantee of JPE set
forth on Schedule 8.12.
"EBITDA Dispute" is defined in Section 3.3(b) of this Agreement.
"EBITDA Period" is defined in Section 3.1(a)(ii) of this Agreement.
"Eidswick" is defined in Section 3.3 of this Agreement.
"Eidswick's Indemnifiable Claims" is defined in Section 3.3(g) of this
Agreement.
"Employment Agreement" is defined in Section 6.2(h) of this Agreement.
"Employment Releases" is defined in Section 6.2(e) of this Agreement.
"Environmental Information" is defined in Section 8.16(d) of this
Agreement.
"Environmental Inspection" is defined in Section 9.6(a) of this
Agreement.
"Environmental Laws" means any Law that relates to pollution (or the
clean up of the environment), or the protection of air, surface water,
groundwater, drinking water, land (surface or subsurface), human health,
the environment or any other natural resource or the use, storage,
recycling, treatment, generation, processing, handling, production or
disposal of Hazardous Materials, including any such Laws enacted by the
State in which JPE and each Subsidiary currently or historically has
conducted business or owned, leased or otherwise operated property and
regulations thereunder, together with all applicable federal Laws,
including, but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 USC Sections 9601 et
seq. and 40 CFR Sections 302.1 et seq., and other regulations thereunder;
the Federal Clean Air Act, as amended, 42 USC Sections 7401 et seq., and
regulations thereunder; the Resource Conservation and Recovery Act, 42 USC
Sections 6901 et seq., as amended, and regulations thereunder; and the
Federal Water Pollution Control Act, 33 USC Sections 1251 et seq., as
amended, and regulations thereunder.
"Environmental Permits" is defined in Section 8.16(g) of this
Agreement.
"Environmental Report" is defined in Section 9.6(b) of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" is defined in Section 8.28 of this Agreement.
"Fairness Opinion" is defined in Section 11.2(d) of this Agreement.
"Fee Properties" is defined in Section 8.2 of this Agreement.
"Fees and Costs" means reasonable legal (including attorneys' and
legal assistants') fees, disbursements and costs; reasonable fees,
disbursements and costs of third party consultants and experts; court
costs; and similar expenses, costs and items.
"Final Actual EBITDA" is defined in Section 3.3(e) of this Agreement.
"Financial Statements" is defined in Section 8.11 of this Agreement.
"GAAP" means generally accepted accounting principles, consistently
applied.
"GMACBC" means GMAC Business Credit, LLC.
"Hazardous Materials" means asbestos-containing materials, mono- and
polychlorinated biphenyls, urea formaldehyde products, radon, radioactive
materials, any "hazardous substance", "hazardous waste", "pollutant",
"toxic pollutant", "oil" or "contaminant" as such terms are used in, or
defined pursuant to any Environmental Law, and any other substance, waste,
pollutant, contaminant or material, including petroleum products and
derivatives, the use, transport, disposal, storage, treatment, recycling,
handling, discharge, Release, threatened Release, discharge or emission of
which is regulated or governed now or in the future by any Environmental
Law.
"IAF" is defined in Section 8.30 to this Agreement.
"Intercompany Transaction" has the meaning set forth in Treasury
Regulation Section 1.1502-13 in effect on or after July 12, 1995.
"Inventory" means all inventory existing on the Closing Date, wherever
located, including, but not limited to, finished goods, work-in-process,
supplies, raw materials, scrap, containers, consigned inventory, central,
shared or common inventory, parts, spares, warehoused inventories and
inventories covered by purchase orders.
"JPE" is defined in the introductory paragraph of this Agreement.
"JPE Determination" is defined in Section 3.3(a) to this Agreement.
"JPE Canada" is defined in Section 8.30 of this Agreement.
"JPE Company" means JPE or any Subsidiary.
"JPE Companies" means JPE and all the Subsidiaries.
"JPE Reports" is defined in Section 8.28 of this Agreement.
"Kojaian" is defined in the introductory paragraph of this Agreement.
"Kojaian Owners" is defined in Section 7.4(b) of this Agreement.
"Laws" means all applicable federal, State, county, municipal and
local (1) Constitutions, statutes, laws, rules, regulations, codes and
ordinances (including zoning and other rules and regulations and building
and other codes) and (2) case law, court or administrative orders,
judgments or decrees, binding opinions of an attorney general and common
law and equitable decisions and doctrines.
"Leasehold Properties" is defined in Section 8.2 of this Agreement.
"Letter of Intent" means the Letter of Intent between Buyer and JPE
dated February 18-19, 1999, as amended by a letter agreement dated April
1-2, 1999, and any further amendments thereto.
"MBCA" means the Michigan Business Corporation Act.
"Marketable Title" shall be determined by the applicable title
standards adopted by the authority of the State bar in which the applicable
Property is located and applicable Law.
"Material Contracts" means (1) all of the agreements set forth on
Schedule 8.6 and (2) any agreements or commitments (including, but not
limited to, credit agreements, debt instruments, letters of credit, supply
agreements, distribution agreements, confidentiality agreements, purchase
orders, production agreements, employment agreements, licenses, leases,
mortgages, deeds of trusts, purchase agreements, sale agreements,
indemnification agreements, service agreements, rental agreements, vendor
agreements, customer agreements, software agreements and all other
agreements and commitments (whether written or otherwise), to which any JPE
Company is a party pursuant to which any party to such agreement or
commitment is required to spend more than $50,000 in the aggregate in any
twelve month period.
"Most Recent Balance Sheets" means the balance sheets contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" means, as of the date of this
Agreement, the Financial Statements for the period ended March 31, 1999,
and, as of the Closing Date, also includes the Closing Financial
Statements.
"Other Documents" is defined in Section 8.32 of this Agreement.
"Permitted Land Exceptions" is defined in Section 10.1(a) of this
Agreement.
"Plans" is defined in Section 8.8(b)(i) of this Agreement
"Plastic Trim" means Plastic Trim, Inc., an Ohio corporation.
"Preferred Shares" means the shares of preferred capital stock of JPE,
each share possessing all rights and privileges (including voting,
distribution and dividend rights) equal to 50 Common Shares, all as
provided by the Resolutions.
"Preferred Shares Subscription Price" is defined in Section 2.2 of
this Agreement.
"Properties" means all of the real properties, and improvements
thereon and fixtures, equipment and other personal property attached
thereto, owned, leased, occupied or used by each of the JPE Companies, and
all real properties that any JPE Company has the right to acquire pursuant
to a purchase agreement, option agreement or otherwise, including land and
all manufacturing, engineering, warehouse, office and other facilities
located thereon; and water, improvements, soil and vegetation on and under,
and the air over, the surface of the Properties, together with:
(a) all easements, permits, licenses, utility agreements and
rights of way appurtenant thereto, and air, mineral and riparian
rights and all tenements, hereditaments, privileges and appurtenances
thereto belonging or in any way appertaining thereto;
(b) any land lying in the bed of any street, road or avenue, open
or proposed, at front of or adjoining the Properties to the centerline
thereof and any unpaid award for damage to the Properties by reason of
grade of any street;
(c) all leases to tenants and security deposits held in
connection therewith; and
(d) all plans and specifications for improvements thereto and any
contracts, warranties and guaranties, if any, with regard thereto.
"Proprietary Rights" means all the intellectual property rights
(including rights to know-how, inventions, trade secrets, confidential
business information, ideas, formulas, techniques, processes, industrial
and utility models, technologies, compositions, technical data, industrial
models, engineering and production processes and techniques, patents,
patent applications, mask works, names, marks, symbols, trademarks, trade
names, service marks, copyrights and logos) owned, licensed or used by or
connected with any of the JPE Companies.
"Record Date" means the fifteenth day following the date of the
Closing (or, if such day is a holiday in the State of Michigan or a day on
which banks are authorized to close, then such date shall be the next day
which in the State of Michigan is not a holiday or on which banks are
authorized to close).
"Related Agreements" means all written agreements, other than this
Agreement, that are executed and delivered by Buyer or JPE pursuant to this
Agreement or in connection with this Transaction, regardless of whether
such other agreements are expressly referred to in this Agreement.
"Release" means spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposal,
depositing and placing of any Hazardous Material, including the abandonment
or discarding of barrels, containers and other closed receptacles
containing any Hazardous Material.
"Resolutions" is defined in Section 9.7 of this Agreement.
"SEC" is defined in Section 8.28 of this Agreement.
"Security Interest" means any interest in personal or real property or
fixture that secures payment or performance of an obligation.
"Shareholders" means the holders of the common shares of JPE on the
Record Date.
"Shares" are the shares of capital stock of JPE of all classes.
"Starboard" means Starboard Industries, Inc., a Michigan corporation.
"Subscribed Shares" means all of the Common Shares and Preferred
Shares to be purchased by Buyer pursuant to Section 2 of this Agreement.
"Subscribed Common Shares" means all of the Common Shares to be
purchased by Buyer pursuant to Section 2.1 of this Agreement.
"Subscribed Preferred Shares" means all of the Preferred Shares to be
purchased by Buyer pursuant to Section 2.2 of this Agreement.
"Subscription Price" means the Common Shares Subscription Price plus
the Preferred Shares Subscription Price.
"Subsidiaries" means Plastic Trim; Starboard; SAC Corporation, a
Michigan corporation; Dayton Parts, Inc., a Michigan corporation; JPE
Finishing, Inc., an Ohio corporation; API/JPE, Inc., a Missouri
corporation; Brake, Axle and Tandem Company Canada Inc., a Canadian
corporation; Fastener Acquisition, Inc., a Michigan corporation; JPE Canada
Inc., a Canadian corporation, and all other direct or indirect subsidiaries
of JPE.
"Target EBITDA" is defined in Section 3.1(a)(ii)(A).
"Tax" means any federal, State, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, intangibles, documentary
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not, and shall include any transferee
liability in respect of any and all of the above.
"Tax Authority" includes the Internal Revenue Service and any federal,
State, county, municipal, local, foreign or other governmental authority
(domestic or foreign) responsible for the administration of any Tax.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement, including any schedule or attachment
thereto, and including any amendment thereof required to be filed with, or
where none is required to be filed with a Tax Authority, the statement or
other document issued by, a Tax Authority in connection with, any Tax.
"Title Company" is defined in Section 10.1(a) of this Agreement.
"Transaction" is the subscription of the Subscribed Shares by Buyer
and all related transactions as provided for and contemplated by this
Agreement and the Related Agreements.
"Transaction Costs" means all fees, expenses and charges (including
Fees and Costs) accrued or incurred, paid or unpaid, by the JPE Companies,
without duplication, in connection with or related to the Transaction,
including such fees, expenses and charges to (a) CIBC Xxxxxxxxxxx Corp. and
Xxxxx & Co., (b) bankruptcy counsel in connection with the bankruptcies of
Plastic Trim and Starboard, (c) counsel of the Bank Group required by the
Bank Group to be paid by JPE, (d) members of the Bank Group incurred in
connection with any prepayment penalty or acceleration costs or expenses in
connection with the payment of the Debt pursuant to Section 5 of this
Agreement, and (e) Xxxxxx Xxxxxxx PLLC and other counsel engaged by JPE.
"Treasury Regulation" means any regulation promulgated under the Code.
"Underground Storage Tank" means any container and any related piping
and material handling equipment of which any portion is located below the
level of the soil at any Property that contains or stores (or was or is
intended to contain or store) Hazardous Materials, unless all containers,
piping and related material handling equipment is fully exposed and located
in the basement of a building at such Property.
"Underlying Documents" is defined in Section 10.1(a) of this
Agreement.
"Warrant Exercise Period" is defined in Section 3.1(c) of this
Agreement.
"Warrants" is defined in Section 3.1 of this Agreement.
"Working Capital" means, in connection with the JPE Companies, on a
consolidated net basis, immediately before the closing (1) an amount equal
to the difference between consolidated current Assets minus consolidated
current liabilities plus (2) $70 million. Current liabilities for purposes
of Working Capital shall include (a) the Debt minus the Bank Discharge, (b)
the Transaction Costs not paid prior to the Closing and not otherwise
included in current liabilities, (c) $500,000 to satisfy the contingent
obligations of JPE with respect to Champion Plastics, Inc. (the "Champion
Costs"), and (d) the amount of the guarantee of JPE to The Bank of Nova
Scotia unless such guarantee is discharged prior to the Closing.
2. Buyer Subscription of Shares.
2.1 Issuance, Purchase and Sale of Common Shares. Subject to the terms and
conditions of this Agreement, at the Closing, in accordance with Section 2.3
below, Buyer shall subscribe for and purchase, and JPE shall issue, sell, convey
and deliver to Buyer, a total of 9,441,420 Common Shares for an aggregate
purchase price of $1,986,725.83 (the "Common Shares Subscription Price").
Notwithstanding the foregoing, the effective date of the subscription set forth
in this Section 2.1 shall be the Delivery Date and Buyer shall not be a
Shareholder on the Record Date.
2.2. Issuance, Purchase and Sale of Preferred Shares. Subject to the terms
and conditions of this Agreement, at the Closing, in accordance with Section 2.3
below, Buyer shall subscribe and purchase, and JPE shall issue, sell, convey and
deliver to Buyer, 1,560,000 Preferred Shares for an aggregate purchase price of
$16,413,274.17 (the "Preferred Shares Subscription Price").
2.3 Buyer Apportionment. Each of ASC and Kojaian shall subscribe for 50% of
each class of the Subscribed Shares and deliver 50% of the Subscription Price.
3. Shareholder Warrants.
3.1 Issuance of Warrants. Subject to the terms and conditions of this
Agreement, on the Record Date, JPE shall (through a dividend) issue to each
Shareholder warrants in the form of Exhibit A to this Agreement (the "Warrants")
granting each such Shareholder the right to purchase Preferred Shares of JPE as
set forth below.
(a)(i) On the Record Date, JPE shall issue (through a dividend) to the
Shareholders (as a whole) Warrants to purchase an aggregate of 345,163.50
Preferred Shares for an aggregate purchase price of $3,450,000 (the "Aggregate
Warrants Exercise Price").
(ii) Notwithstanding the foregoing, the Aggregate Warrants Exercise Price
is subject to the following adjustments:
(A) In the event that the Final Actual EBITDA of the JPE Companies is
in excess of $34.3 million (the "Target EBITDA") for the two year period
following the Closing (the "EBITDA Period"), then the Aggregate Warrants
Exercise Price shall be reduced by $1.00 for each $2.00 increment by which
the Target EBITDA is exceeded.
(B) In the event that during the period from the Closing Date to the
date on which the Shareholders receive notice of the Final Actual EBITDA,
one or more of the JPE Companies expend funds on remediation in connection
with any environmental condition at one or more of the Properties (whether
or not such condition would constitute a breach of Section 8.16 below),
including any remediation required by, pursuant to or in connection with
any Environmental Law, then the Aggregate Warrants Exercise Price shall be
increased by $.75 for each $1.00 of direct and indirect costs, expenses and
fees (including Fees and Costs) in excess of $250,000 that are spent by the
JPE Companies on such remediation, provided that in no event shall the
Aggregate Warrants Exercise Price be increased by more than $1,000,000
pursuant to this Section 3.1(a)(ii)(B).
(C) In the event that the Bank Group receives Warrants pursuant to
Section 4.2 below, the Aggregate Warrants Exercise Price shall be the
aggregate exercise price for all of the Warrants in the aggregate issued to
the Shareholders pursuant to Section 3.1 and the Bank Group pursuant to
Section 4.2 below, and, therefore, the exercise price for any individual
Warrant shall be determined by dividing the Aggregate Warrants Exercise
Price (including any adjustments pursuant to this Section 3.1(a) and
Section 3.2 below), by the aggregate number of Warrants issued to the
Shareholders and the Bank Group.
(b) If required by applicable Law, Buyer will effect a registration of the
Preferred Shares to be issued pursuant to the Warrants under applicable
securities Laws prior to the expiration of the EBITDA Period.
(c) The Warrants shall only be exercisable for the ninety (90) day period
beginning on the date on which JPE provides the Shareholders notice of the Final
Actual EBITDA after the JPE Determination (the "Warrant Exercise Period").
(d) Each Shareholder shall receive the number of Warrants equal to such
Shareholder's pro rata percentage of his or her ownership of the Shares on the
Record Date.
3.2 Target EBITDA Adjustment. The Target EBITDA shall be equitably adjusted
in the event of the occurrence after the Closing of any of the following events:
(a) a material disposition of Assets, or a business, of any of the JPE Companies
(whether by asset sale, stock sale, investment agreement, merger or otherwise)
to a third party, (b) a material acquisition of the assets or a business
(whether by asset purchase, stock purchase, investment agreement, merger or
otherwise) of a business or an entity (other than a JPE Company), (c) capital
expenditures exceeding $11.5 million in the aggregate by the JPE Companies and
(d) the transfer of some or all of the Proprietary Rights of any JPE Company to
Buyer and the concurrent or subsequent payment of licensing fees by such JPE
Company to Buyer (the Target EBITDA, after adjustment under this Section 3.2,
the "Adjusted Target EBITDA"). The Target EBITDA was calculated in accordance
with Schedule 3.2 to this Agreement.
3.3 Final Actual EBITDA Determination.
(a) As soon as practical following the EBITDA Period, the EBITDA for the
EBITDA Period (the "Actual EBITDA") and the Adjusted Target EBITDA shall be
determined by JPE's certified public accountants after consultation with Xxxxxxx
Xxxxxxxx or, in the event of his death or disability at the time,
PricewaterhouseCoopers (Eidswick or PricewaterhouseCoopers, "Eidswick"). As soon
as practicable, JPE shall provide Eidswick with JPE's analysis and determination
of the Actual EBITDA and the Adjusted Target EBITDA (the "JPE Determination").
The JPE Determination shall be fully binding and conclusive twenty (20) days
after delivery of the JPE Determination to Eidswick unless the provisions of
Section 3.3(b) below apply. Eidswick shall be given full access to all
information and documentation under JPE's control regarding the calculation of
the JPE Determination as Eidswick reasonably requests.
(b) In the event that Eidswick provides JPE with written notice of a good
faith objection to the JPE Determination specifying the details of the objection
within twenty (20) days of JPE providing notice to Eidswick of the JPE
Determination, which objection, if accepted, would adjust the Actual EBITDA or
the Adjusted Target EBITDA by an amount equal to 10% of the amount set forth in
the JPE Determination (an "EBITDA Dispute"), such EBITDA Dispute shall be
submitted for a final binding resolution to a nationally-recognized firm of
certified public accountants (the "Accountants") mutually acceptable to JPE and
Eidswick.
(c) In the event Eidswick and JPE are unable to agree on the Accountants
pursuant to Section 3.2(b) above, each of Eidswick and JPE shall choose one
nationally-recognized firm of certified public accountants (other than
PricewaterhouseCoopers or Ernst & Young LLP), and such firms shall choose a
third nationally-recognized firm of certified public accountants (other than
PricewaterhouseCoopers or Ernst & Young LLP) to whom the EBITDA Dispute shall be
submitted. In the event either party fails to select such a
nationally-recognized firm of certified public accountants within twenty (20)
days of the delivery of Eidswick's notice of objection, then the matter shall be
resolved by such accountants selected by the other party. In the event that both
parties select accountants and such accountants are, within twenty (20) days of
selection, unable to agree on the Accountants to whom the dispute shall be
submitted, the Accountants shall be selected by the President of the American
Arbitration Association (who, under no circumstance, shall choose
PricewaterhouseCoopers or Ernst & Young LLP).
(d) The Accountants (whether selected pursuant to Section 3.2(b) or 3.2(c)
above) shall resolve the EBITDA Dispute by determining the Actual EBITDA and the
Adjusted Target EBITDA within sixty (60) days of submission, all in accordance
with this Agreement and GAAP.
(e) The JPE Determination (in the event such determination is binding
pursuant to Section 3.3(b) above) or the decision of the Accountants (in the
event that an EBITDA Dispute is resolved pursuant to Section 3.3(d) above) (the
applicable calculation, the "Final Actual EBITDA"), (i) shall be binding on and
non-appealable and incontestable by JPE, Buyer and Eidswick; (ii) shall not be
subject to collateral attack for any reason absent manifest error, perjury or
misconduct and (iii) shall have the same effect as an arbitration pursuant to
Michigan Compiled Law Section 600.5001. A judgment of any Michigan Circuit Court
may be rendered upon the final determination of the Final Actual EBITDA and
Adjusted Target EBITDA made pursuant to this Section 3.3.
(f) JPE shall pay Eidswick and the Accountants all reasonable fees, costs
and expenses incurred in connection with this Section 3.3.
(g) JPE shall indemnify and hold Eidswick harmless against any damages,
penalties, fines, liabilities, claims, losses and expenses (including Fees and
Costs) that may be incurred by Eidswick in connection with Eidswick's
performance of Eidswick's obligations under this Section 3.3 ("Eidswick's
Indemnifiable Claims"); provided, however, that JPE shall have no such
obligations under this Section 3.3(g) in the event Eidswick's Indemnifiable
Claims arise from Eidswick's purposeful malfeasance, recklessness or gross
negligence.
4. Adjustments Based on Bank Group Discharge.
4.1 Bank Group Subscription of Shares. Subject to the terms and conditions
of this Agreement, if the Bank Group, pursuant to a binding Bank Agreement fully
executed and delivered prior to or at the Closing, forgives, extinguishes,
releases and discharges an amount of the Debt that would otherwise be due and
outstanding without payment by JPE (a "Bank Discharge") equal to $17.0 million,
at the Closing, JPE shall issue, sell, convey and deliver to the Bank Group
23,010.90 Preferred Shares for an aggregate purchase price of $1,000 pursuant to
a subscription agreement reasonably acceptable to Buyer, JPE and the Bank Group
(the "Bank Group Subscription"). If the Bank Group Discharge is for an amount
less than $12 million, the Bank Group shall receive no Preferred Shares pursuant
to this Section 4.1. If the Bank Discharge is for an amount above $12 million,
the Bank Group Subscription shall be for the number of Preferred Shares equal to
(a) a number that is equal to the amount of dollars the Bank Discharge exceeds
$12 million multiplied by (b) a fraction, the numerator of which is 23,010.90
and the denominator of which is 5.0 million.
4.2 Bank Group Warrants. If the Bank Group Discharge is for an amount equal
to $17.0 million, JPE shall issue to the Bank Group (for no other consideration)
Warrants granting the Bank Group the right to purchase up to 86,290.88 Preferred
Shares. If the Bank Group Discharge is for an amount no more than $12 million,
the Bank Group shall receive no Warrants pursuant to this Section 4.2. If the
Bank Group Discharge is for an amount above $12 million, the Bank Group shall
receive (for no other consideration) Warrants granting the Bank Group the right
to purchase the number of Preferred Shares equal to (a) a number that is the
number of dollars the Bank Discharge exceeds $12 million multiplied by (b) a
fraction, the numerator of which is 86,290.88 and the denominator of which is
5.0 million. The exercise price for the Warrants granted to the Bank Group
pursuant to this Section 4.2 shall be calculated as set forth in Section
3.1(a)(ii)(C) above.
4.3 Buyer Subscription Adjustment. If the Bank Group subscribes for
23,010.90 Preferred Shares pursuant to Section 4.1 above, the number of
Preferred Shares to be subscribed for by Buyer, and issued, sold, conveyed and
delivered pursuant to Section 2.2 above by JPE to Buyer, at the Closing, shall
be increased by 437,207.10 Preferred Shares (for an aggregate total of
1,997,207.12 Preferred Shares issued to Buyer) with no adjustment to the
Preferred Shares Subscription Price. If the Bank Group subscribes for no
Preferred Shares pursuant to Section 4.1 above, the number of Preferred Shares
to be subscribed for by Buyer, and issued, sold, conveyed and delivered pursuant
to Section 2.2 by JPE to Buyer, shall remain as set forth in Section 2.2 (i.e.,
1,560,000 Preferred Shares) with no adjustment to the Preferred Shares
Subscription Price. If the Bank Group subscribes for one or more Preferred
Shares, the number of Preferred Shares to be subscribed for by Buyer, and
issued, sold, conveyed and delivered pursuant to Section 2.2 by JPE to Buyer
shall be increased (with no adjustment to the Preferred Shares Subscription
Price) by the product of (a) nineteen (19) multiplied by (b) the number of
Preferred Shares subscribed for by the Bank Group pursuant to Section 4.1 above.
5. Payment of Debt. At the Closing, JPE shall, pursuant to the Bank
Agreement, pay-off the Debt (minus the Bank Discharge) pursuant to written
"pay-off" letters and instructions from the Bank Group in form reasonably
acceptable to Buyer, stating the amounts necessary to fully repay the Bank Group
for such Debt as of the Closing Date and to receive a final binding
extinguishment, release and discharge of all indebtedness, obligations and
liabilities of, and connected to, the Debt (including the Bank Discharge),
including all mortgages, deeds of trust, Security Interests, pledges, charges,
liens, encumbrances, claims and any other restrictions of any kind or nature on
the Assets of each JPE Company, as of the Closing (including all prepayment
penalties and charges).
6. Actions to be Taken at the Closing and Thereafter.
6.1 Closing Date. The Closing shall take place at the offices of Buyer's
counsel at 10:00 a.m. on April 30, 1999 or such prior business day as is
designated by Buyer by five days' notice to JPE. If any of the conditions
precedent to Buyer's obligation to close this Transaction set forth in Sections
11.1 and 11.3 below are not satisfied on the scheduled Closing Date and Buyer
does not wish to waive such condition, Buyer may, at its sole discretion, on at
least 24 hours' notice to JPE, reschedule the Closing for another date (which
must be a business day) not later than June 30, 1999; Buyer shall have the
ability to reset the Closing Date pursuant to this sentence as often as it deems
necessary.
6.2 Actions to be Taken at the Closing.
(a) At the Closing, JPE shall deliver to Buyer certificates for the
Subscribed Preferred Shares, together with such other documents as Buyer may
reasonably request in order to issue to Buyer or evidence the issuance to Buyer
of full title to such Subscribed Preferred Shares, free and clear of any lien,
Security Interest, pledge, charge, encumbrance or restriction of any kind or
nature.
(b) At the Closing, JPE shall deliver to the Bank Group (if applicable) the
number of Warrants as provided in Section 4 above, free and clear of any liens,
Security Interests, pledges, charges, encumbrances or restrictions of any kind
or nature other than as provided in the Warrants.
(c) At the Closing, JPE shall deliver to Buyer the following documents:
(1) Certified resolutions of its Board of Directors authorizing the
execution, delivery and consummation of this Agreement and each Related
Agreement to which JPE is a party.
(2) A certificate executed by an officer of JPE, dated as of the
Closing Date and in form and substance reasonably acceptable to Buyer,
certifying as to JPE's compliance as of the Closing Date with each of its
agreements, representations, warranties and covenants under this Agreement
and the Related Agreements to which JPE is a party.
(3) With respect to each JPE Company, a copy of its Articles of
Incorporation (certified by an appropriate State official as of a date
within thirty (30) days of the Closing Date), Bylaws and documents (each
certified by an appropriate State official as of the Closing Date or, if
dated before the Closing Date, updated by facsimile on the Closing Date)
showing that it is duly incorporated and is in good standing in its State
of incorporation and is qualified to do business in and in good standing in
each jurisdiction in which such qualification and good standing is
necessary under applicable Law.
(4) A certificate of the Secretary or an Assistant Secretary of JPE
attesting as to the incumbency of each officer who executes this Agreement
or a Related Agreement.
(5) The written resignations (effective as of the end of business on
the Closing Date) of such officers and directors of each JPE Company as may
be required by Buyer at least three (3) business days before the Closing
Date, or documentation and indemnities in form and substance satisfactorily
to Buyer as to the removal, consistent with law, of any non-resigning
officer or director so required.
(6) Such additional information and materials as Buyer may have
reasonably requested.
(d) At the Closing, each of ASC and Kojaian shall deliver to JPE the
following documents:
(1) Certified resolutions of its members authorizing the execution and
delivery of this Agreement and each Related Agreement to which it is a
party.
(2) A copy of its Articles of Organization (certified by an
appropriate State official as of a date within thirty (30) days of the
Closing Date), and its Operating Agreement and documents (each certified by
an appropriate State official as of the Closing Date or, if dated before
the Closing Date, updated by facsimile on the Closing Date) showing that it
is duly incorporated and in good standing in the State of Michigan and is
qualified to do business in the State of Michigan.
(3) A certificate of its Secretary or an Assistant Secretary attesting
as to the incumbency of each member or authorized person who executes this
Agreement or a Related Agreement on its behalf.
(4) Evidence of the complete payment, satisfactory release and
discharge of the Debt pursuant to Section 5 above.
(5) Such additional documents, information and materials as JPE may
reasonably request.
(e) At the Closing, JPE shall provide Buyer with evidence satisfactory to
Buyer that (1) the stock option agreements and employment and consulting
agreements between JPE (and each Subsidiary (if applicable)) and each of Xxxxxxx
Chrysler, President and Chief Executive Officer of JPE, and Xxxxxxx Xxxxxxxx,
Chairman of JPE, have been terminated and rendered null and void and that a
release has been executed between JPE (and each Subsidiary (if applicable)) and
Buyer, on the one hand, and each of Xxxxxxx Chrysler and Xxxxxxx Xxxxxxxx, on
the other hand, releasing both JPE (and each Subsidiary (if applicable)) and
Buyer from any liabilities or obligations stemming from the termination of the
employment and consulting agreements and stock option agreements, in form
satisfactory to Buyer in its sole discretion (the "Employment Releases").
(f) At the Closing, Buyer shall pay the Subscription Price by immediately
available funds wired in accordance with wire instructions provided by JPE.
(g) At the Closing, JPE and Buyer shall execute and deliver such other
documents and certificates as are required by the terms of this Agreement
(including the conditions precedent set forth in Section 11 below) and the
Related Agreements (including all governmental and third party consents or as
may be reasonably requested by the other party).
(h) At the Closing, Xxxxxxx Chrysler and Buyer shall enter into an
employment agreement in the form of Exhibit C to this Agreement (the "Employment
Agreement").
(i) At the Closing, Buyer shall provide JPE evidence that upon Closing
financing is available to the JPE Companies in an amount no less than $51.6
million; provided, however, that such financing may be subject to the
satisfaction of the conditions precedent in Sections 11.1 and 11.3 below and the
conditions precedent required by the lenders of such financing.
(j) At the Closing, (i) JPE shall deliver to the Bank Group certificates
for the Preferred Shares subscribed for pursuant to Section 4.1 above, together
with such other documents as the Bank Group may reasonably request in order to
issue to the Bank Group or evidence the issuance to the Bank Group of full title
to such Preferred Shares, free and clear of any lien, Security Interest, pledge
charges encumbrance or restriction of any kind or nature and (ii) the Bank Group
shall deliver to JPE $1,000 as payment for such Preferred Shares.
6.3 Actions to be Taken As of the Record Date. As of the Record Date, JPE
shall issue to the Shareholders (as a dividend) the number of Warrants as
provided in Section 3 above, free and clear of any liens, Security Interests,
pledges, charges, encumbrances or restrictions of any kind or nature other than
as provided in the Warrants.
6.4 Actions to be Taken on the Delivery Date. On the Delivery Date, JPE
shall deliver certificates for the Subscribed Common Shares, together with such
other documents as Buyer may reasonably request in order to issue to Buyer or
evidence the issuance to Buyer of full title to such Subscribed Common Shares,
free and clear of any lien, Security Interest, pledge, charge, encumbrance or
restriction of any kind or nature.
7. Buyer's Representations and Warranties. Buyer represents and warrants to
JPE as follows, as of the date of this Agreement and as of the Closing Date:
7.1 Organization; Power and Authority. Each of ASC and Kojaian is a limited
liability company duly organized, validly existing and in good standing under
the Laws of the State of Michigan, and has the limited liability company power
and authority to enter into this Agreement and the Related Agreements and to
consummate the Transaction.
7.2 Authorization; Due Execution; No Conflicts.
(a) This Agreement and each Related Agreement has been duly authorized by
all necessary action on the part of each of ASC and Kojaian. Upon the execution
and delivery by ASC and Kojaian of this Agreement and the Related Agreements (as
applicable), this Agreement and the Related Agreements (as applicable) shall
each constitute the legal, valid and binding obligation of each of ASC and
Kojaian, enforceable against each in accordance with its terms.
(b) The execution, delivery and performance of this Agreement and the
Related Agreements by each of ASC and Kojaian shall not (1) constitute a breach
or violation of (A) either ASC's or Kojaian's Articles of Organization or
Operating Agreement, (B) any Law or (C) any material agreement, indenture, deed
of trust, mortgage, loan agreement or other material instrument to which either
ASC or Kojaian is a party or to which either is bound; or (2) constitute a
violation of any order, judgment, opinion of an attorney general or decree to
which either ASC or Kojaian is a party or by which either of their assets are
bound or affected.
7.3 Brokers. Except as set forth on Schedule 7.3 to this Agreement, Buyer
(1) has not dealt with any broker or finder in connection with this Transaction;
(2) has not caused or created any liability to any broker or finder in
connection with this Transaction; and (3) is not aware of any claim from any
third party that it is entitled to brokerage, finders or other similar fees in
connection with this Transaction.
7.4 Ownership of Buyer.
(a) ASC is wholly owned by Xxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxxxxx (the
"ASC Owners").
(b) Kojaian is wholly owned by Xxxx Xxxxxxx and C. Xxxxxxx Xxxxxxx (the
"Kojaian Owners").
(c) Subject to the terms and conditions of this Agreement, upon the
consummation of the Transaction, each of ASC and Kojaian (or their applicable
successors or assigns pursuant to Section 13.3 below) shall own 50% of each
class of the Subscribed Shares.
(d) No shareholders or similar agreement exists between or among ASC,
Kojaian, the ASC Owners and/or the Kojaian Owners whereby either ASC and/or the
ASC Owners, on the one hand, or Kojaian and/or the Kojaian Owners, on the other
hand, have the right to designate, elect or appoint a majority of the members of
the JPE Board of Directors.
7.5 Survival. The representations and warranties set forth in Section 7
shall expire after the consummation of the Closing.
8. JPE's Representations and Warranties. JPE represents and warrants to
Buyer as follows, as of the date of this Agreement and as of the Closing Date:
8.1 Organization; Power and Authority; Authorization; Due Execution; No
Conflicts.
(a) Each JPE Company (1) is a corporation duly incorporated, validly
existing and in good standing under the Laws of the State of its incorporation,
and (2) has the corporate power and authority to (A) own, operate and lease the
Assets it owns, operates and leases, (B) carry on its business as it is now
being conducted, (C) enter into this Agreement and the Related Agreements to
which it is a party and (D) consummate the Transaction. JPE has delivered to
Buyer true and correct copies of the corporate charter and Bylaws of each JPE
Company.
(b) This Agreement and each Related Agreement to which JPE is a party has
been duly authorized by all necessary corporate action on JPE's part. Upon the
execution and delivery of this Agreement and the Related Agreements, this
Agreement and each Related Agreement shall constitute the legal, valid and
binding obligation of JPE, enforceable against JPE, in accordance with their
respective terms.
(c) JPE's execution, delivery and performance of this Agreement and the
Related Agreements shall not (1) constitute a breach or violation of (A) the
corporate charter or Bylaws of any JPE Company, (B) any Law or (C) assuming the
satisfaction of the conditions in Section 11 below, any Material Contract;
(2) assuming the satisfaction of the conditions in Section 11 below, constitute
a violation of any order, opinion of an attorney general, judgment or decree to
which any JPE Company is a party or by which the Assets of any JPE Company is
bound or affected; (3) except as set forth on Schedule 8.1(c), result in the
acceleration of any material Debt owed by any JPE Company that will not be
discharged, released, paid-off, forgiven or extinguished pursuant to Section 5
above; or (4) result in the creation of any lien, charge or encumbrance upon the
currently outstanding shares of any JPE Company, the Subscribed Shares, the
Warrants or the Assets of any JPE Company.
8.2 Title. JPE and each Subsidiary (as applicable) has and up until the
consummation of the Closing shall have (a) except as described on Schedule
8.2(a) to this Agreement, good and Marketable Title in fee simple (subject only
to the Permitted Land Exceptions) to those Properties identified and legally
described on Schedule 8.2(a) to this Agreement (the "Fee Properties"), and (b) a
valid leasehold interest in and right to occupy and use those Properties
identified and legally described on Schedule 8.2(b) to this Agreement (the
"Leasehold Properties"). No JPE Company possesses a valid and enforceable right
to acquire under option (including, without limitation, pursuant to an option
contract, right of first refusal, land contract, contract to deed and/or trust
agreement) any real property.
8.3 Properties and Improvements.
(a) Schedules 8.2(a)-(b) to this Agreement fully, accurately and completely
(1) list the addresses of all real estate of all of the Properties, and (2)
identify (A) the JPE Company with an interest in such Property and the nature of
such interest (e.g., fee simple or leasehold); (B) in the case of Leasehold
Properties, the document(s) or instrument(s) pursuant to which those interests
were created; and (C) in brief summary form, the applicable JPE Company's
current use and plans (if any) for each Property.
(b) Except as set forth on Schedules 8.2(a)-(b), no JPE Company owns,
leases, occupies, uses or has any other right to or interest in any real
property.
(c) Schedules 8.2(a)-(b) fully, accurately and completely set forth all
material leases, subleases, licenses, concessions, rights of use or occupancy,
options, rights of first refusal or other agreements (written or otherwise)
granted to any party or parties with respect to any portion of any Property.
(d) Except as provided on Schedules 8.2(a)-(b) or the Permitted Land
Exceptions, no party has title to, any interest in or any right to use or occupy
any Property or any material portion of any Property.
(e) With respect to the Properties and the business of the JPE Companies at
each Property:
(1) The applicable JPE Company has received all material Approvals
that are required to conduct the business of the respective JPE Company (or
such other parties) at each Property, and each such Property has been
operated and maintained in accordance with applicable Law and all subject
Approvals in all material respects. To the knowledge of each JPE Company,
there are no proceedings pending or threatened which may result in the
limitation, termination, cancellation or suspension, or any adverse
modification of, any Approvals. JPE and each Subsidiary (as applicable) has
filed all material registrations, reports and other documents required by
federal, State, county, municipal and local authorities and regulating
bodies in connection with its business.
(2) To the knowledge of each JPE Company, the consummation of this
Transaction will not invalidate any of the Approvals or require submission
of any modifications of any such Approvals, and will not impair any pending
Approvals or appeals thereof. To the knowledge of each JPE Company, there
is no Law, restriction or moratorium imposed, enacted or, threatened or
proposed by any federal, State or local government or agency, the effect of
which would impair any JPE Company's ability to maintain or obtain, after
the consummation of the Transaction, any Approvals necessary for the
conduct of the business of the respective JPE Company's business as
currently conducted at such Property.
(3) A true and complete summary of all necessary Approvals (indicating
whether each such Approval has been obtained or is applied for) is set
forth on Schedule 8.3(e) to this Agreement.
8.4 Assets.
(a) Except as set forth on Schedule 8.4(a) to this Agreement, all material
Assets of the JPE Companies are in operating condition, subject only to ordinary
wear and tear, and fit for their intended purpose.
(b) Except as set forth on Schedule 8.4(b) to this Agreement, (1) all of
the material Assets are owned by a JPE Company, free and clear of all liens,
encumbrances, Security Interests, claims, pledges, charges or restrictions of
any kind or nature, (2) except as set forth on Schedule 8.4(b) or Schedule 8.6
to this Agreement, none of the material Assets are subject to a lease and (3) no
JPE Company holds any material Assets on consignment.
(c) All items that comprise Inventory of each JPE Company have been
manufactured or purchased for sale or use in the ordinary course of business.
The quantity of each item of Inventory and the mix of such items included in the
Most Recent Financial Statements for each JPE Company are sufficient,
appropriate and adequate to permit operation of such on a stand alone basis and
as otherwise presently proposed to be operated following the Closing and in a
manner consistent with past practice and present conduct. The raw materials and
work-in-process of each JPE Company are useable in the ordinary course of
business in the production or completion of the finished goods included in the
Assets. The finished goods included in the Assets (other than slow moving and
obsolete inventory to the extent reserved for in the books of the respective JPE
Company) are fit for the ordinary purposes for which such finished goods are
used and are saleable in the ordinary course of business within a reasonable
period of time and at such JPE Company's current selling prices for
non-Affiliated transactions. Each JPE Company has provided for adequate reserves
in accordance with GAAP with respect to slow moving and obsolete Inventory.
(d) All actual costs of items comprising the Inventory of each JPE Company
have been established by each JPE Company in the ordinary course and in
accordance with GAAP, and such prices have not been increased in contemplation
of the Transaction and are the same as would exist if this Agreement was not
contemplated nor to be entered into.
(e) With regard to each JPE Company, the tangible non-real estate Assets
(together with the buildings and improvements on the Properties) are suitable
for the purposes for which they are presently used and have the capacity on the
Closing Date to permit the manufacture of all products presently manufactured by
such JPE Company in accordance with (i) the total overall annual and seasonal
operating levels of such JPE Company for 1999 and (ii) except as set forth on
Schedule 8.4(e) to this Agreement, the current specifications as of the date of
this Agreement and as of the Closing Date required by current customers of such
JPE Company, and to the knowledge of each JPE Company, there is no material
expenditure presently required in order to maintain such condition and state of
repair or replace any such Assets.
8.5 Claims; Litigation; Compliance with Laws; Approvals.
(a) There has not been asserted any (and, to the knowledge of each JPE
Company, there are no) claims of any nature against any JPE Company that exceed
$100,000 in the aggregate or $25,000 in a single instance, including claims
arising out of or in connection with the operation of its business or the Assets
except as set forth in Schedule 8.5(a) to this Agreement.
(b) Except as set forth on Schedule 8.5(b) to this Agreement, (1) no JPE
Company is: (A) a party to any litigation, arbitration proceeding or
administrative investigation, and none is pending or, to the knowledge of the
JPE Companies, threatened against any JPE Company or (B) subject to any
outstanding order, writ, injunction or decree of any court, government or
governmental authority or arbitration against or affecting it; and (2) to the
knowledge of each JPE Company, there is not any basis for any material
litigation, proceeding or investigation of the nature described in clause (1)(A)
above.
(c) Except as set forth on Schedule 8.16 to this Agreement, no JPE Company
is in material violation of, and JPE's actions in the consummation of the
Transaction will not materially violate or infringe, (i) any Law (including any
Law relating to zoning, land use, employment, employment practices, the
environment, occupational safety or health) or (ii) any right or concession,
copyright, trademark, trade name, patent, know-how or other proprietary or
intellectual property right of others.
8.6 Agreements; Contracts; Warranties.
(a) Set forth on Schedule 8.6 to this Agreement are each of the agreements
and commitments of any nature (including, but not limited to, credit agreements,
debt instruments, letters of credit, supply agreements, distribution agreements,
confidentiality agreements, purchase orders, production agreements, employment
agreements, licenses, leases, mortgages, deeds of trusts, purchase agreements,
sale agreements, indemnification agreements, service agreements, rental
agreements, vendor agreements, customer agreements, software agreements and all
other agreements and commitments (whether written or otherwise)), to which any
JPE Company is a party (i) involving any material long-term agreement or
commitment with the customers of any JPE Company or (ii) that is or will be
required to be filed with or disclosed to the SEC pursuant to the Exchange Act.
(b) With respect to the Material Contracts, except as set forth on Schedule
8.6 to this Agreement:
(l) No JPE Company, or to the knowledge of each JPE Company no third
party to any Material Contract, has breached or is in default of such
Material Contracts nor has such breach or default been asserted by any
party, and there has not occurred any event which, with the passage of time
or giving of notice (or both), would constitute such a breach or default.
(2) Each Material Contract shall remain in full force and effect
(without imposition of any restriction, adverse condition, limitation, cost
or penalty to any JPE Company or Buyer) notwithstanding the Transaction
(except for those Material Contracts terminated or modified pursuant to
this Agreement including as a result of the payment of the Debt).
(3) Each JPE Company has satisfied all of its material obligations (to
the extent that such obligations can be determined) as of the date of this
Agreement under each Material Contract and each JPE Company shall satisfy
all remaining obligations under each Material Contract to the extent such
obligations are required to be satisfied prior to the Closing Date except
for those objections which cannot be so satisfied pursuant to the terms of
the Forbearance Agreement or due to the binding orders of the Bankruptcy
Courts.
(4) No JPE Company or any third party to any Material Contract has
repudiated any provision of any Material Contract.
(c) JPE has provided to Buyer true and a complete copy of each written
instrument or document, and a true and complete written summary of each
unwritten understanding, that is identified on Schedule 8.6.
(d) JPE has provided to Buyer true and correct sample forms of customer
warranties and purchase orders that are representative of those used by each JPE
Company within the past year.
(e) JPE acknowledges that it has entered into certain correspondence and
memoranda with General Motors Corporation, Ford Motor Company and
DaimlerChrysler regarding the terms of the sale of certain JPE Companies'
products to such corporations, the material terms of which are set forth on
Schedule 8.6(e) to this Agreement.
8.7 Proprietary Rights. All of the Proprietary Rights are listed or
described on Schedule 8.7 to this Agreement and, except as disclosed in Schedule
8.7, are the sole and exclusive property of JPE or a Subsidiary (as identified
on Schedule 8.7). The Proprietary Rights owned or licensed by each JPE Company
are sufficient to conduct its business as presently conducted. Except as
disclosed on Schedule 8.7, the Proprietary Rights have not been hypothecated,
assigned or licensed, in whole or in part, to any person or entity, do not
infringe upon or violate the rights of any person or entity. To the knowledge of
each JPE Company, no JPE Company has at any time taken, or permitted to be
taken, any action, or permitted any use, or is aware of any such action or use
by any third party, with respect to the Proprietary Rights, that would
jeopardize the applicable ownership and right to use of the Proprietary Rights
by any JPE Company (as applicable). To the knowledge of each JPE Company, no
person or entity is infringing or violating the Proprietary Rights of any JPE
Company except as disclosed on Schedule 8.7.
8.8 Employees; Employee Benefits.
(a) Employees. Except as set forth on Schedule 8.8(a) of this Agreement:
(i) No employee of any JPE Company has any understanding or agreement
(written or otherwise) with any JPE Company.
(ii) No JPE Company has any collective bargaining or union contracts
or agreements. To the knowledge of each JPE Company there have not been any
unfair labor practice complaints, labor difficulties or work stoppages, or
threats thereof, affecting any JPE Company's unions, employees or
activities.
(iii) There is no union campaign presently being conducted to solicit
employees to authorize a union to request a national labor relations board
certification election with respect to the employees of any JPE Company.
(iv) There are no independent contractual arrangements between any JPE
Company and any officer or director of any JPE Company.
(v) No JPE Company has entered into a service, leasing or licensing
agreement for professional services which requires an annual payment of
more than $50,000 per individual; and any individuals providing such
services pursuant to any such arrangement listed on Schedule 8.8(a) are
independent contractors and duly licensed (if required) in the State in
which they perform such services.
(b) Employee Benefits.
(i) Set forth on Schedule 8.8(b) to this Agreement is a complete list
of each employee pension, profit sharing, stock bonus, stock option, bonus,
incentive, defined contribution, deferred compensation, hospitalization,
medical, insurance, severance or other plan, fund, program or policy
providing employee benefits maintained or contributed to by any JPE
Company, including any entity, which, with any JPE Company, is described in
Code Section 414(b), (c), or (m), in which any employees or former
employees of any JPE Company have participated or under which any of them
has accrued and remains entitled to any benefits (the "Plans"); and JPE has
provided Buyer copies of all such written Plans (or descriptions thereof if
the Plan is unwritten) and all related documents, including any trust
agreements, insurance contracts or other funding medium related to any of
the Plans. JPE has also provided Buyer with the most recent actuarial
valuation report with respect to any of the Plans for which such report has
been prepared, the most recent asset valuation report(s) with respect to
each of the Plans which has assets, the most recent and prior annual report
(Form 5500) filed with respect for each of the Plans for which such report
must be filed, and the most recent favorable IRS determination letter
received with respect to each of the Plans that is intended to be qualified
under Section 401(a) or Section 403(b) of the Code, or trust intended to be
exempt under Section 501(a) or Section 501(c)(9) of the Code.
(ii) Except as set forth in Section 8.8(b), no JPE Company, including
any entity which, with any JPE Company is described in Code Section 414(b),
(c), or (m), has made any commitment or taken any action to adopt or
establish any additional employee benefit plan(s) within the meaning of
Section 3(3) of ERISA or to materially increase the benefits under any of
the Plans.
(iii) Except as set forth in Section 8.8(b), all such Plans which are
subject to ERISA and/or the Code, comply in form and have been and are
operated in substantial compliance with all applicable provisions of ERISA
and/or the Code, and all governmental filings required to be made during
the prior three fiscal years of the Plans and participant notices relating
to the Plans have been timely filed and/or distributed.
(iv) No JPE Company is a contributing employer to any multi-employer
plan within the meaning of Section 4001(a)(3) of ERISA, and no withdrawal
liability has been incurred by or asserted against any JPE Company or any
entity which, with any JPE Company, is described in Code Section 414(b),
(c), or (m), with respect to a multi-employer plan in which employees of
any JPE Company participate.
(v) Except as set forth in Schedule 8.8(b), (A) for each Plan and
attendant trust that is intended to satisfy the provisions of Section
401(a) and Section 501(a) of the Code, the JPE Company sponsoring the Plan
has obtained a favorable determination letter from the IRS to such effect;
(B) none of the determination letters have been revoked by the IRS, nor has
the IRS given any written notice to any JPE Company that it intends to
revoke any such determination letter; (C) no material liability under Title
IV or Section 302 of ERISA has been incurred by any JPE Company or by any
entity which, with any JPE Company, is described in Code Section 414(b),
(c), or (m), that has not been satisfied in full; (D) no reportable event
within the meaning of Section 4043 of ERISA or non-exempt prohibited
transaction within the meaning of Section 406 of ERISA has occurred with
respect to any Plan and no Tax has been imposed pursuant to Section 4975 of
the Code in respect thereof; (E) there are no outstanding liabilities of
any of the Plans (including unfunded benefit liabilities as defined in
Section 4001(a)(18) of ERISA under any single employer pension plan), other
than liabilities for administrative fees and benefits to be paid in the
ordinary course to participants in the Plans or their beneficiaries in
accordance with the terms thereof, and the consummation of this Transaction
shall not give rise to any such liabilities; (F) there are no pending,
threatened or anticipated claims involving any of the Plans; (G) no
fiduciary of any of the Plans has any liability for breach of fiduciary
duty or any other failure to act or comply in connection with the
administration of or investment of the assets of any of the Plans; and (H)
all contributions required to be made to any of the Plans and all premiums
for insurance coverage for each of the three previous fiscal years of the
Plans ended before the date of this Agreement have been timely paid in
full, including any premiums to be paid to the Pension Benefit Guaranty
Corporation.
(vi) None of the Plans provides, or has any obligation or commitment
to provide, health benefits to any current or former employees, or
dependents thereof, of any JPE Company beyond their retirement or other
termination of service, other than coverage mandated by Part 6 of Subtitle
B of Title I of ERISA.
(vii) No amounts payable under the Plans is likely to fail to be
deductible for federal income Tax purposes by virtue of Section 280G of the
Code.
8.9 Insurance. Set forth on Schedule 8.9 to this Agreement is a true and
complete list of all policies of fire, liability, workers' compensation and
other forms of insurance owned or held by each JPE Company (including
coverages), and JPE has delivered to Buyer true and complete summaries of all
such policies. All such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the Closing Date have
been paid, and, except as set forth on Schedule 8.9, no notice of cancellation
or termination has been received with respect to any such policy. Such policies
(a) are sufficient for compliance with all requirements of Law and all
agreements to which the applicable JPE Company is a party; (b) are valid,
outstanding and enforceable policies; (c) shall remain in full force and effect
through the Closing Date without the payment of additional premiums (except for
policies for which monthly payments are required); and (d) except as provided on
Schedule 8.9 shall not in any way be affected by, or terminate or lapse by
reason of, the Transaction. Set forth on Schedule 8.9 are all risks that any JPE
Company has designated as being self-insured or partially funded.
8.10 Net Sales. The monthly net sales of each JPE Company from March 1,
1998 through March 31, 1999 are set forth on Schedule 8.10 to this Agreement.
Buyer's representatives shall have the right, during business hours and upon at
least 24 hours notice, to examine the books and records of each JPE Company to
verify net sales after April 1, 1999. Before the Closing, JPE shall furnish
Buyer with an updated Schedule 8.10 updating, through the most recent
practicable date preceding the Closing Date, the monthly net sales of each JPE
Company.
8.11 Financial Statements. JPE has delivered to Buyer complete copies of
the financial statements of each JPE Company for the three years ended December
31, 1996, 1997 and 1998, respectively, with the corresponding accountants'
reports, including balance sheets and accompanying statements of profit and
loss, and for the three months ended March 31, 1999 (collectively, the
"Financial Statements"). Before the Closing, JPE shall furnish Buyer with
financial statements updating, through the end of the month preceding the
Closing Date (the "Closing Financial Statements"). Each of the Financial
Statements reflects, and the Closing Financial Statements shall fairly reflect
in all material respects, the financial condition, results of operations as of
such dates and for the period then ended, and all of such statements were
prepared in accordance with GAAP assuming JPE is a going concern (except, with
respect to interim financial statements, for normal, year-end adjustments and
the absence of footnotes). Attached as Schedule 8.11 to this Agreement are the
Most Recent Financial Statements (which shall be updated with the Closing
Financial Statements prior to the Closing Date).
8.12 Undisclosed Liabilities. Subject to all items disclosed in this
Agreement, set forth on Schedule 8.12 of this Agreement or that are included in
the calculation of Working Capital, to the knowledge of each JPE Company, no JPE
Company has any liability or obligation of any kind (contingent or otherwise)
not reflected on the Most Recent Financial Statements or has occurred in the
ordinary course of business since the date of the Most Recent Financial
Statements. Subject to all items disclosed in this Agreement or that are
included in the calculation of Working Capital, to the knowledge of each JPE
Company, there is no basis for the assertion of any claim or liability against
any JPE Company that is not fully reserved against in the Most Recent Financial
Statements or has occurred in the ordinary course of business since the date of
the Most Recent Financial Statements.
8.13 Tax Matters.
(a) Except as set forth on Schedule 8.13 to this Agreement, each JPE
Company has duly and timely filed all Tax Returns that it was (or will be)
required to file up to and including the Closing Date (including extensions of
time to file). Except as set forth on Schedule 8.13, all such Tax Returns were
true, correct and complete in all material respects. Each JPE Company has timely
paid all owed Taxes (whether or not shown on any Tax Return) in full. Except as
set forth on Schedule 8.13, no JPE Company currently is the beneficiary of any
extension of time within which to file any Tax Return. With respect to each JPE
Company, no claim has ever been made by a Tax Authority in a jurisdiction where
such JPE Company does not file Tax Returns that such JPE Company may be subject
to taxation by that jurisdiction. There are no Security Interests on any of the
Assets that arose in connection with any failure (or alleged failure) to pay any
Tax.
(b) Each JPE Company has (and will have through the Closing Date) withheld
and paid all Taxes required to have been (or to be) withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party, and has otherwise complied with all
applicable Laws relating thereto.
(c) Except as set forth to the contrary on Schedule 8.13, no director or
officer (or employee responsible for Tax matters) of any JPE Company has been
provided notice that any Tax Authority shall propose, assert or assess any
additional Taxes for any period for which Tax Returns have been filed. There is
no audit, dispute, claim or other proceeding concerning any Tax or Tax Return of
any JPE Company either (1) raised by any Tax Authority or (2) as to which any
director and officer (or employee responsible for Tax matters) of JPE has or
should have knowledge. JPE has provided to Buyer copies of all federal, State,
county, municipal, local and foreign income Tax Returns with respect to any JPE
Company for taxable periods ended on or after December 31, 1992, and has
identified those Tax Returns that currently are the subject of an audit (if any)
by a Tax Authority. JPE has delivered to ASC true, correct and complete copies
of all Tax Returns, examination reports, and statements of deficiencies assessed
against or agreed to by or with respect to any JPE Company since December 31,
1992.
(d) No JPE Company has waived any statute of limitations regarding Taxes or
agreed to any extension of time with regard to a Tax assessment or deficiency.
Each JPE Company has disclosed on its respective federal income Tax Returns all
positions taken therein that could give rise to a substantial understatement
penalty within the meaning of Code Section 6662.
(e) No JPE Company (1) has filed a consent under Code Section 341(f)
concerning collapsible corporations; (2) has failed to make any payments, is
obligated to make any payments, or is a party to any agreement that under
certain circumstances could obligate it to make any payments that shall not be
deductible under Code Section 280G; (3) has been a United States real property
holding corporation within the meaning of Code Section 897(c)(2) during the
applicable period specified in Code Section 897(c)(1)(A)(ii); (4) except as set
forth on Schedule 8.13, is (nor it has ever been) a party to any Tax allocation,
sharing indemnity or similar contract or arrangement or assumed the Tax
liability of any other person under contract or other arrangement; (5) except as
set forth on Schedule 8.13, has granted a power of attorney with respect to any
matter relating to Taxes; (6) has participated in an international boycott under
Code Section 999; (7) except as set forth on Schedule 8.13, has agreed, or is
required to make, any adjustment under Code Section 481 by reason of a change in
accounting method or otherwise; (8) is a party to any safe harbor lease within
the meaning of Code Section 168(f)(8), as in effect prior to amendment by the
Tax Equity and Responsibility Act of 1982; (9) has had any permanent
establishments in any foreign country, as defined in any applicable treaty or
convention between the United States and each foreign countries; or (10) is a
party to any joint venture, partnership or other arrangement or contract that
could be treated as a partnership for federal income Tax purposes. Except as set
forth in Schedule 8.13, no JPE Company (A) has been a member of an Affiliated
Group filing a consolidated federal income Tax Return or (B) has any liability
for the Taxes of any person under Treasury Regulation Section 1.1502-6 (or any
similar provision of State, local, or foreign Law), as a transferee or
successor, by contract, or otherwise.
(f) Set forth on Schedule 8.13 is the following information with respect to
each JPE Company as of December 31, 1998: (1) the basis of its Assets; (2) the
amount of any net operating loss, net capital loss, unused foreign or other Tax
credit, excess charitable contribution deductions, and any other Tax elections
and any other Tax attributes of JPE; (3) the amount of any deferred gain or loss
allocable to such JPE Company arising out of any Deferred Intercompany
Transaction; and (4) the amount of any gain or loss allocable to such JPE
Company arising out of any Intercompany Transaction. Except as disclosed on
Schedule 8.13, no JPE Company has a net operating loss or other Tax attributes
presently subject to limitation under Code Sections 382, 383, or 384 or their
underlying Treasury Regulations.
(g) The unpaid Taxes of each JPE Company (1) do not, as of March 31, 1999,
exceed the reserve for Tax liability for such JPE Company (other than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the Most Recent Balance Sheets
(rather than in any notes thereto) and (2) will not exceed such reserve as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of such JPE Company in filing its Tax Returns.
8.14 Absence of Changes or Events. Except as disclosed on Schedule 8.14 to
this Agreement, each JPE Company has operated its business only in the ordinary
course and there has not been, since January 1, 1999, (a) any material adverse
change in the financial condition, results of operation or business of any JPE
Company; (b) any damage, destruction or loss, regardless of whether covered by
insurance, that materially and adversely affects any JPE Company's Assets; or
(c) any entry into or commitment to a transaction material to any JPE Company's
business.
8.15 Creditors.
(a) Set forth on Schedule 5 is a true, accurate and complete statement of
the Debt.
(b) JPE has provided to Buyer all material information regarding all of the
creditors of each JPE Company as of March 31, 1999 and the amounts owed to each
such creditor.
8.16 Environmental and Occupational Matters.
Except as set forth on Schedule 8.16 to this Agreement:
(a) There are no Hazardous Materials or Underground Storage Tanks present
at any Property, other than those quantities of such Hazardous Materials as
occur naturally in the native and uncontaminated natural soils and waters at
such Property, that would require investigations, studies, sampling, testing,
removal, response, remediation or clean-up with respect to any Hazardous
Materials pursuant to any Environmental Laws. To the knowledge of each JPE
Company, no JPE Company has (and no JPE Company has any knowledge that any prior
owner of any Property or any existing or prior tenant, sub-tenant or occupant of
any Property or any other person or entity, or their respective contractors,
agents, employees or invitees has) ever generated, used, stored, treated,
transferred, transported, processed, manufactured, refined, handled, produced,
arranged to dispose or disposed of Hazardous Materials at, from or affecting
such Property in any manner that violates any Environmental Law or would give
rise to any obligation or liability under any Environmental Law. No JPE Company
has or possesses knowledge that any other person or entity: (1) caused or
permitted any Property to be used to generate, manufacture, refine, transport,
treat, dispose of, transfer, produce or process Hazardous Materials in any
manner that was in violation of any Environmental Law or that gives rise to any
obligation or liability under any Environmental Law or (2) caused or permitted
any Release or threatened Release of Hazardous Materials at, from or affecting
any Property owned or operated by any JPE Company which, directly or indirectly,
caused or contributed to (A) pollution or contamination or (B) the presence of
Hazardous Materials at or about any Property in violation of any Environmental
Law or in a manner that gives rise to any obligation or liability under any
Environmental Law.
(b) To the knowledge of each JPE Company, no JPE Company has received any
notice, claim or allegation of any violation, and to the knowledge of each JPE
Company, there are no existing material violations of any Environmental Law at
any Property. To the knowledge of the JPE Companies, there are no actions
commenced or threatened by any person or entity for or related to or arising out
of non-compliance with Environmental Laws that apply to any Property, activities
at such Property or Hazardous Materials at, from or affecting such Property.
(c) The development, use and operation of all real property previously
used, owned, operated or developed by each JPE Company or any subsidiary
previously owned by JPE and all activities conducted thereon, have been in
compliance with all applicable Environmental Laws.
(d) JPE has provided Buyer with true and complete copies of all: (1)
Environmental Reports and other environmental or worker safety or health-related
data, information, correspondence, audits and other documents (collectively, the
"Environmental Information") regarding the Properties or JPE's or the JPE
Companies' operations thereat in their possession or control; and (2) all
Environmental Information relevant to any other property ever owned, leased or
operated by JPE or a JPE Company in the JPE Companies' possession or control.
(e) To the knowledge of any JPE Company, neither JPE nor any JPE Company,
nor any person to which they are a successor, has ever disposed of Hazardous
Materials in a manner that has or will give rise to any damage, liability,
claim, loss or expense in connection with the Release or threatened Release of
such Hazardous Materials.
(g) Each JPE Company has obtained and is in material compliance with all
permits, licenses and other approvals required under any Environmental Law (the
"Environmental Permits"). To the extent required prior to the Closing Date, each
JPE Company has made timely and complete application for the renewal, extension,
or reissuance of all Environmental Permits, and no JPE Company has obtained
information which would lead it to believe that any such Environmental Permits
may not be renewed, extended or reissued in due course and as requested without
the imposition of cost or penalty.
8.17 Subsidiaries. Except for the entities set forth on Schedule 8.17 to
this Agreement, JPE does not own (and has not owned since JPE has been
incorporated) any equity interest, directly or indirectly, in any corporation,
joint venture, partnership, limited liability company, firm, association,
business or other entity. Set forth on Schedule 8.17 is the current status of
each entity (in connection with JPE) listed therein.
8.18 Capitalization.
(a) Set forth on Schedule 8.18(a) to this Agreement is a correct and
complete description of the capitalization of each JPE Company. All of the
issued and outstanding capital stock of each JPE Company is validly issued,
fully paid, nonassessable and free of preemptive rights.
(b) Except for this Agreement and as set forth on Schedule 8.18(b) to this
Agreement, there are no (1) options, warrants or other rights, agreements,
arrangements or commitments of any character to which any JPE Company is a party
relating to the issued or unissued capital stock of any JPE Company or
obligating any JPE Company to grant, issue or sell any shares of stock or other
equity interest in itself or any JPE Company; (2) agreements, arrangements or
commitments of any character (contingent or otherwise) pursuant to which any
person is or may be entitled to receive any payment based on revenues or
earnings of any JPE Company; or (3) voting trusts, proxies or other agreements
or understandings to which any shareholder of any JPE Company or any JPE Company
is a party or by which any shareholder of any JPE Company or any JPE Company is
bound with respect to the voting of shares of any JPE Company.
8.19 Bank Accounts. Set forth on Schedule 8.19 to this Agreement is a full
and complete list of all of the bank accounts and the names of the persons
authorized to draw thereon of each JPE Company.
8.20 Guaranties. Except as set forth on Schedule 8.20 to this Agreement, no
JPE Company has guaranteed any debt or obligation of any entity or individual
other than a JPE Company and none of the debts, liabilities or obligations of
any JPE Company are guaranteed by any third parties.
8.21 Related Parties. There are no written or other legally binding
contractual relationships between any JPE Company and any family member of any
officer or director of any JPE Company.
8.22 Accounts Receivable; Working Capital.
(a) Set forth on Schedule 8.22 to this Agreement is a list of the Accounts
Receivable of each JPE Company as of March 31, 1999, and all such amounts listed
as Accounts Receivable are accurate in all respects and determined in accordance
with GAAP. All Accounts Receivable arose in the ordinary course of business and
are valid and collectible in the ordinary course net of reserves, subject to no
counterclaims or setoffs (except for those of original equipment manufacturers
pursuant to standard contractual terms), at the aggregate recorded amount
thereof as set forth on the records of each JPE Company and the Most Recent
Balance Sheets.
(b) JPE acknowledges that the Subscription Price was determined, in part,
by JPE's representation that the JPE Companies shall have (on a consolidated
basis) Working Capital of at least $35 million immediately prior to the Closing.
8.23 Brokers. Except as set forth on Schedule 8.23 to this Agreement:
(a) No JPE Company (1) has dealt with any broker or finder in connection
with this Transaction; (2) has caused or created any liability to any broker or
finder in connection with this Transaction; or (3) is aware of any claim from
any third party that it is entitled to brokerage, finders or other similar fees
in connection with this Transaction.
(b) No JPE Company is aware of any broker or finder which was instrumental
or had any part in bringing about this Transaction.
8.24 Flips. No intercompany transactions including JPE or any Subsidiary or
between Subsidiaries and no related party transactions between any shareholder
or any affiliate thereof increased the recorded net book value of any asset of
JPE or any Subsidiary (including in anticipation of, or in connection with, this
Transaction).
8.25 Construction Liens. Except as set forth on Schedule 8.25 to this
Agreement, there are no claims of, or amounts due and owing to, any laborers,
materialmen, subcontractors, suppliers or the like which could give rise to a
construction lien or similar lien. No materials incorporated into the Properties
or the improvements thereon are subject to any Security Interest, except for any
Security Interest that may arise in connection with a recorded mortgage.
8.26 Letters of Credit. No JPE Company has issued any letter of credit
benefiting any third party that shall remain outstanding as of the Closing Date.
8.27 Business Names. Schedule 8.27 sets forth all names (registered or
otherwise) by which each JPE Company (including unincorporated divisions)
currently conducts (or in the past has conducted) its business and operations,
including names used with governmental agencies, suppliers, customers, the
public and otherwise.
8.28 SEC Statements, Reports and Documents. Except as set forth on Schedule
8.28 to this Agreement, JPE has timely filed all required forms, reports,
statements and documents with the Securities and Exchange Commission (the "SEC")
since the date JPE became a reporting company under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). JPE has delivered or made available to
counsel for Buyer: (a) its Annual Reports on Form 10-K for the fiscal years
ended December 31, 1995, 1996, 1997 and 1998, respectively; (b) its Quarterly
Reports on Form 10-Q for the fiscal quarters ended June 30, 1997 and 1998, and
September 30, 1997 and 1998 and March 31, 1997 and 1998; (c) all proxy
statements relating to JPE's meetings of stockholders (whether annual or
special) held since December 31, 1996, (d) all other forms, reports, statements
and documents filed or required to be filed by it with the SEC since December
31, 1997, and (e) all amendments and supplements to all such reports and
registration statements filed by JPE with the SEC (collectively, the "JPE
Reports"). As of their respective dates, the JPE Reports complied in all
material respects with all applicable requirements of the Exchange Act and the
rules and regulations promulgated thereunder, and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements (including any related notes) of JPE included in the JPE Reports
fairly reflects in all material respects the financial condition and results of
operations of JPE as of such dates and for the period then ended, and all of
such statements were prepared in accordance with GAAP assuming JPE is a going
concern, subject, in the case of unaudited interim consolidated financial
statements, to (i) the absence of certain notes thereto and (ii) normal year end
adjustments. JPE has heretofore furnished or made available to Buyer a correct
and complete copy of any amendments or modifications, which have not yet been
filed with the SEC but which are required to be filed, to agreements, documents
or other instruments which previously had been filed by JPE with the SEC
pursuant to the Securities Act or the Exchange Act.
8.29 Shares.
(a) Upon Buyer's payment of the Subscription Price, the Subscribed
Preferred Shares purchased therewith will be duly authorized, validly issued,
fully paid and nonassessable. Immediately following the Closing, there will be,
with regard to JPE, issued and outstanding the number of Common Shares and
Preferred Shares (including the Subscribed Preferred Shares and the Bank Group
Subscription) set forth on Schedule 8.29 and no other capital stock (of any
class) of JPE shall be outstanding.
(b) On the Delivery Date, the Subscribed Common Shares will be duly
authorized, validly issued, fully paid and nonassessable. Immediately following
the delivery of the Subscribed Common Shares, there will be, with regard to JPE,
issued and outstanding the number of Common Shares and Preferred Shares
(including the Subscribed Shares and the Bank Group Subscription) set forth on
Schedule 8.29 and no other capital stock (of any class) of JPE shall be
outstanding.
(c) Upon consummation of the Transaction, Buyer shall own all of the
Subscribed Preferred Shares, free and clear of any lien, claim, Security
Interest, pledge, charge, encumbrance or restriction of any kind or nature.
8.30 Intercompany Debt. Set forth on Schedule 8.30 to this Agreement are
all of the outstanding intercompany debt obligations (whether or not evidenced
by promissory notes or other similar instruments) among the JPE Companies.
Except as set forth on Schedule 8.30, no indebtedness of any kind is owed (a) by
any JPE Company to Industrial & Automotive Fasteners, Inc., a Michigan
corporation ("IAF"), or JPE Canada Inc., a Canadian corporation ("JPE Canada")
(IAF, JPE Canada, any Subsidiaries that have divested all or substantially all
of their assets and any former subsidiaries of any JPE Company, collectively,
the "Divested Subsidiaries"), or any other Divested Subsidiary or (b) by any
Divested Subsidiary to any JPE Company.
8.31 Certain Former Subsidiaries. JPE has consummated the sale of all of
the capital stock of IAF to XxxXxxx Acquisition Company, a Delaware corporation,
and (b) the assets of JPE Canada to The Ventra Group, Inc., a Canadian
corporation (collectively, the "Divestitures"). JPE has provided Buyer with all
material documentation evidencing the Divestitures.
8.32 Disclosure. To the knowledge of each JPE Company, no statement,
representation or warranty made by JPE in this Agreement, any other document,
letter or brochure relating to JPE and provided to Buyer (the "Other Documents")
or any Related Agreement, and none of the Schedules, Exhibits or attachments to
this Agreement, the Other Documents or any Related Agreement, contains any
untrue statement of any material fact or omits a material fact necessary to make
the statements contained in this Agreement, the Other Documents, the Related
Agreements or such Schedules, Exhibits or attachments, in light of the
circumstances in which they were made, not misleading.
8.33 Survival. The representations and warranties set forth in this Section
8 shall not survive after the Closing Date, except Section 8.29, which shall not
survive after the Delivery Date.
9. Covenants Pending the Closing and Delivery Date.
9.1 Conduct Through the Closing Date. Except, in the case of Plastic Trim
and Starboard, as required by the respective Bankruptcy Courts or any binding
order, decree or "Plan of Reorganization" issued or approved by such Bankruptcy
Courts, and except as restricted pursuant to terms and conditions of the current
(or any subsequent or amended) Forbearance Agreement entered into between the
Bank Group (other than GMACBC) and JPE or as otherwise contemplated by this
Agreement, prior to the Closing Date, JPE shall (except as otherwise consented
to in writing by Buyer):
(a) Operate JPE (and cause the Subsidiaries to operate) in the ordinary
course as historically conducted.
(b) Not enter into any transaction, take any action, or fail to take any
action, which would result in, or could reasonably be expected to result in, any
of JPE's representations, warranties, disclosures or agreements in this
Agreement or the Related Agreements or the Exhibits or Schedules to this
Agreement and the Related Agreements or in connection with the consummation of
the Transaction, to not be true and complete immediately after the occurrence of
the Transaction. Without limiting JPE's obligations under this Section 9.1(b)
but subject to the limitations set forth in Section 9.1(a) above, JPE shall (or
shall cause the Subsidiaries to): (1) maintain and preserve the Properties; (2)
not modify, amend or terminate any of the documents, instruments or agreements
set forth on Schedule 8.3(a) or Schedule 8.3(e); (3) not enter into any
documents, instruments or agreements that would alter or modify its rights with
respect to any Property; (4) own and operate each Property in a manner
consistent with its past course of business and in a commercially reasonable
manner; (5) maintain the JPE Companies' non-real estate Assets in good operating
condition, subject to ordinary wear and tear; (6) maintain all present insurance
in force; and (7) comply with the provisions of all agreements, Material
Agreements and Laws applicable to each JPE Company and its Assets.
(c) Except with regard to the Employment Agreement, the Employment Releases
or as otherwise contemplated by this Agreement, not allow any JPE Company to
enter into any agreement, contract, purchase or sale other than in the ordinary
course of its business, including any agreement that would dispose of or
encumber any of the Assets other than in the ordinary course of business. No JPE
Company shall increase or become committed (or agree to become committed to in
the future) to an increase in the compensation of any employee except as
otherwise required by a contractual obligation existing prior to April 16, 1999.
(d) Furnish weekly reports to Buyer showing the net dollar volume of the
JPE Companies' sales during such week and costs of sales during such week. The
reports may be conveyed to Buyer initially by telephone with a written report
delivered to Buyer within five days after the end of each such week.
(e) Use its best efforts to preserve the present business organization and
goodwill of each JPE Company intact, including (i) employees, officers and
directors and (ii) the present business relationships and goodwill with
customers, suppliers, subcontractors, engineers, architects, media, governmental
contacts and others having dealings affecting the business of the JPE Companies.
(f) Cause each JPE Company to pay all costs, expenses, liabilities and
obligations in the ordinary course when due, regardless of whether any such
items are to be reimbursed by Buyer under this Agreement.
(g) Except as required by this Agreement, not alter the capitalization of
any JPE Company as set forth on Schedules 8.18(a)-(b).
9.2 Approvals and Consents. JPE shall obtain, in writing, all necessary
corporate, shareholder, governmental and third party approvals and consents
required in order to authorize and approve this Agreement and the Related
Agreements and to consummate the subscription and delivery of the Subscribed
Shares to Buyer and the Transaction pursuant to this Agreement, including the
approval of the Transaction from the Bankruptcy Courts pursuant to binding
Confirmation Orders. JPE shall pay all costs and expenses related to obtaining
such approvals with respect to its business and operations.
9.3 Advice of Changes. Between the date of this Agreement and the Closing
Date, JPE shall promptly notify Buyer in writing (including revised, amended or
updated Schedules or Exhibits to this Agreement) of any fact which, if existing
or known at the date of this Agreement, would have been required to be set forth
in this Agreement or disclosed pursuant to this Agreement or a Related Agreement
or which would affect or change any of the information set forth in the Exhibits
or Schedules of this Agreement or any Related Agreement. Any such updates shall
be subject to Section 11.1(b) below.
9.4 Notice of Litigation. Each of Buyer and JPE shall promptly notify the
other party in writing if it receives any notice, or otherwise becomes aware, of
any action or proceeding instituted or threatened before any court or
governmental agency by any third party to restrain or prohibit, or obtain
substantial damages with respect to this Agreement, any Related Agreement or the
consummation of the Transaction.
9.5 Access to Properties and Records; Inspection. From the date of this
Agreement through the Closing Date, JPE shall provide (or caused to be provided)
to Buyer and its counsel, accountants and other representatives, agents and
consultants full access, during normal business hours, to all of the personnel
and Assets of the JPE Companies (including the Properties, Inventory, financial
and operating data, books, Tax Returns, contracts, commitments and records of
each JPE Company) including such access as is needed to conduct a physical
inspection, including, but not limited to, an Environmental Inspection of the
Assets satisfactory to Buyer (collectively, "Buyer's Due Diligence
Investigation").
9.6 Environmental Inspection.
(a) Between the date of this Agreement and the Closing, Buyer may have an
independent environmental consultant ("Buyer's Consultant") perform an
environmental inspection and audit of one or more of the Properties (together
with any already undertaken environmental inspections, the "Environmental
Inspection"). The Environmental Inspection shall be conducted in a manner that
does not unreasonably interfere with the operation of the business of the JPE
Companies nor does material damage to the Properties. Prior to conducting an
inspection other than a traditional "Phase I" environmental audit, Buyer's
Consultant shall first prepare a work plan describing the proposed Environmental
Inspection. JPE shall have the right to review and comment on Buyer's
Consultant's work plan five business days before it is implemented. JPE shall
have the right to split samples with Buyer or Buyer's Consultant.
(b) Prior to the Closing Date, the results of the Environmental Inspection
shall be (1) shared between Buyer and JPE and (2) treated as privileged and
confidential as shall the documents constituting and the documents used in or
for the Environmental Inspection (the "Environmental Report"); provided that the
Environmental Report may be disclosed as required by Law or as requested by
Buyer's attorneys, consultants and advisors, lenders (and its lenders'
advisors). Buyer shall promptly restore any disturbance to the Property which
results from the Environmental Inspection to the same or reasonably similar
predisturbed condition and shall, in compliance with Environmental Laws,
promptly dispose at an appropriate off-site location all waste materials
generated on such Property due to the performance of the Environmental
Inspection.
(c) In addition to and notwithstanding the foregoing, prior to the Closing
Date, JPE and Buyer, at JPE's sole cost and expense, shall engage Superior
Property Services Group to conduct a Phase I or Phase II Environmental
Inspection (as set forth on Schedule 9.6(b) to this Agreement) of the Properties
set forth on Schedule 9.6(b). The results of such Phase I and Phase II
Environmental Inspections shall be subject to Section 9.6(b) above.
9.7 Preferred Shares. Prior to the Closing Date, JPE shall authorize the
issuance of Preferred Shares, in accordance with resolutions duly adopted by JPE
in the form of Exhibit B to this Agreement (the "Resolutions"), with all of the
rights and privileges as described in the Resolutions.
9.8 Other Actions. Buyer and JPE shall take all such other and further
actions, consistent with this Agreement and the Related Agreements, as the other
may reasonably request.
10. Title.
10.1 Title Commitment, Survey and Zoning. As evidence of title to the Fee
Properties and the Leasehold Properties identified by Buyer, JPE shall furnish
to Buyer, at JPE's cost (including premiums), with a copy to Buyer's attorneys,
as soon as possible:
(a) A commitment from a title insurance company approved by Buyer (the
"Title Company") to issue to the applicable JPE Company, at or as soon as
possible after Closing, an ALTA owner's title insurance policy, without standard
exceptions and with such endorsements as Buyer may require (including, without
limitation, a survey endorsement, a "same as" endorsement, a non-imputation
endorsement, "fairway" endorsement, zoning endorsement and a contiguity
endorsement, with the arbitration provisions and creditor's rights provisions
deleted), in the amount provided for each Property as set forth on Schedule 10.1
to this Agreement, insuring title to the Properties with the appurtenant
easements to be vested in JPE in good and marketable condition, free and clear
of any liens and encumbrances except easements, restrictions, covenants and
agreements of record which shall not, in Buyer's sole and absolute discretion,
be inconsistent with or make unduly expensive or burdensome the JPE Companies'
use of the Properties subsequent to the Closing (the "Permitted Land
Exceptions"). The commitment for title insurance shall be accompanied by
readable copies of all documents cited as exceptions to title therein (the
"Underlying Documents"), which shall be certified by the Title Company as true,
correct and complete copies of the Underlying Documents.
(b) A current boundary survey of each Property certified to the respective
JPE Company, Buyer and the Title Company (and such other persons as Buyer may
require) by a registered land surveyor or engineer containing legal descriptions
of such Property in form and content sufficient to permit deletion of the
standard title exceptions with respect to such Properties and showing (1) all
adjacent and interior public streets and roadways, (2) the exact location of all
access roads, and entry buildings and points of all utilities to the Property,
(3) the exact location of all buildings and improvements, and (4) the exact
location of all recorded or visible easements on or servicing the Property. The
surveys shall certify to the respective JPE Company, Buyer, the Title Company,
and such other persons or entities as Buyer may desire that no portion of any
Property lies within a federally designated flood plain; and that there are no
encroachments either onto or off of the Properties, except as shown. The legal
description of the Properties set forth in the commitment or commitments for
title insurance that JPE is required to furnish under Section 10(a) shall
conform exactly to the legal descriptions set forth in the survey required under
this Section 10(b).
10.2 Objections to Title. If objection to the title to any Property is made
by Buyer, based upon a written opinion of Buyer's attorney, as soon as possible
after the date of receipt of all of the commitment, the Underlying Documents,
and the survey provided pursuant to Section 10.1, that the title is not in the
condition required for performance under this Agreement, JPE shall have ten days
from the time that it is notified in writing of the particular defect claimed to
provide Buyer with a revised title commitment evidencing that such defect has
been remedied and/or insured over in a manner satisfactory to Buyer. If JPE is
unable to obtain such revised title commitment within such ten day period, Buyer
shall have the option to (1) proceed with this Transaction, in which event
thesubject Property shall be transferred to an entity not owned by JPE or any
Subsidiary at no cost or penalty to Buyer and the Subscription Price shall be
reduced by the amount set forth on Schedule 10.1 to this Agreement as the
assumed value of such Property; (2) terminate this Agreement pursuant to
Section 12.1 below; or (3) waive such defect and proceed to Closing.
11. Conditions Precedent to the Obligation of the Parties to Close.
11.1 Buyer's Conditions Precedent. Buyer's obligations under this Agreement
are subject to the satisfaction at or before the Closing Date of each of the
following conditions (the fulfillment of any of which may be waived in writing
by Buyer):
(a) All terms, covenants and conditions of this Agreement and the Related
Agreements to be complied with or performed by JPE prior to or on the Closing
Date shall have been complied with and performed by JPE, including JPE's timely
taking of all actions and delivery of all documents required to be taken and
delivered by them under this Agreement and the Related Agreements.
(b) All representations, warranties, disclosures and statements of JPE
contained in this Agreement, the Related Agreements and the Other Documents
shall be true and complete as of the date of this Agreement and the Closing
Date. Any amendments to the Exhibits and Schedules to this Agreement and the
Related Agreements which JPE proposes to deliver after the date of this
Agreement shall be satisfactory to Buyer, in its sole discretion.
(c) JPE shall have furnished to Buyer an opinion of Xxxxxx Xxxxxxx PLLC,
dated as of the Closing Date, in form of Exhibit D to this Agreement.
(d) Since the date of this Agreement, there shall not have been any
material adverse change in the financial condition or business of any JPE
Company, or in the condition of the Assets of any JPE Company, or any event
which may, in the future, cause such a change.
(e) JPE shall have delivered to Buyer the commitment or commitments for
title insurance and the boundary surveys required pursuant to Section 9 above,
showing title to the Properties to be in the condition required under this
Agreement for the performance of this Agreement and the Title Company shall have
extended the effective date of such commitment or commitments to the Closing
Date and shall be irrevocably committed to issue its title insurance policy or
policies pursuant to such commitment or commitments without any exception for
"defects, liens, encumbrances, adverse claims or any other matters, if any,
created, first appearing in the public records or attaching subsequent to the
effective date but prior to the date the proposed insured acquires for value of
record the estate or interest covered by the title commitment" or similar "gap"
exception.
(f) JPE and Buyer shall have received in writing (1) all approvals and
consents necessary to authorize, approve and consummate this Agreement, the
Related Agreements and the Transaction as provided in Section 9.2, (2) the
Confirmation Orders and approval of the Bankruptcy Courts in accordance with the
current terms of the Plan of Reorganizations applicable to Plastic Trim and
Starboard (and any changes thereto shall be acceptable to Buyer in its sole
discretion) and (3) any third party consents necessary to maintain the Material
Contracts set forth on Schedule 8.6 after the consummation of this Transaction.
(g) No employment or consulting (or similar) agreement and no stock option
nor similar agreement shall exist between any JPE Company and either Xxxxxxx
Chrysler or Xxxxxxx Xxxxxxxx; and JPE shall have entered into a binding
Employment Release with each of Xxxxxxx Xxxxxxxx and Xxxxxxx Chrysler.
(h) Buyer, JPE and the Bank Group shall have entered into a Bank Agreement
providing for the full satisfaction, discharge, release and pay-off of the Debt.
(i) Buyer shall have arranged for JPE to have obtained financing following
the Closing in an amount no less than $51.6 million; provided, however, that
such financing may be subject to the satisfaction of the conditions precedent in
this Section 11.1 and 11.3 below and those conditions precedent required by the
lenders to such financing.
(j) JPE shall have at least $35 million in Working Capital on the Closing
Date.
(k) JPE shall have duly adopted the Resolutions and such Resolutions shall
be fully authorized and in effect as of the Closing Date.
(l) Buyer shall be satisfied, in its sole discretion, with the results of
Buyer's Due Diligence Investigation.
(m) JPE shall have delivered to ASC a copy of the Minutes of its Board of
Directors Meeting in which it received the Fairness Opinion.
(n) Xxxxx Xxxxxxxx, Xxxxx X. Xxxxxxxxx, Xxxx Xxxxxxx and C. Xxxxxxx Xxxxxxx
shall have been elected to the Board of Directors of JPE, effective as of the
end of business on the Closing Date.
11.2 JPE's Conditions Precedent. JPE's obligations under this Agreement are
subject to the satisfaction at, or prior to, the Closing Date of the following
conditions precedent (the fulfillment of any of which may be waived in writing
by JPE):
(a) All terms, covenants and conditions of this Agreement and the Related
Agreements to be complied with or performed by Buyer prior to or on the Closing
Date shall have been fully complied with and performed by Buyer, including
Buyer's timely taking of all actions and delivery of all documents required to
be taken and delivered by it under this Agreement and the Related Agreements.
(b) The representations, warranties, disclosures and statements of Buyer
contained in this Agreement and the Related Agreements shall be true and
complete as of the date of this Agreement and on the Closing Date.
(c) Buyer shall have furnished to JPE an opinion of Xxxxxxxx Xxxxxx
Xxxxxxxx and Xxxx dated the Closing Date, in form of Exhibit E to this
Agreement.
(d) The Board of Directors of JPE shall have received the analysis prepared
by and the "fairness opinion" of Xxxxx & Co. to the effect that, as of the
Closing Date (based upon and subject to the factors and assumptions set forth
therein) the Transaction is fair from a financial point of view to the
Shareholders (the "Fairness Opinion").
(e) Buyer shall provide JPE evidence that upon Closing financing is
available to the JPE Companies in an amount no less than $51.6 million;
provided, however, that such financing may be subject to the satisfaction of the
conditions precedent in Sections 11.1 above and 11.3 below and those conditions
precedent required by such lenders.
11.3 Mutual Conditions Precedent. Each party's obligations under this
Agreement are subject to the satisfaction at, or prior to, the Closing Date of
the following mutual conditions precedent (the fulfillment of which may be
waived in writing by the parties):
(a) No litigation or administrative proceeding or other civil or criminal
proceedings shall have been commenced or threatened to challenge the right of
any party to consummate the Transaction contemplated under this Agreement and
the Related Agreements.
(b) The terms of this Agreement and the Transaction shall be approved by
the Bankruptcy Courts pursuant to binding Confirmation Orders to the extent
required to consummate the Transaction under applicable Law.
(c) The Exhibits and the Schedules to this Agreement not attached to this
Agreement upon its execution by the parties shall be delivered prior to the
Closing Date in a form approved by the Buyer and JPE, which approval shall not
be unreasonably withheld.
12. Default; Termination of Agreement.
12.1 Termination. This Agreement may be terminated at any time before the
Closing as follows:
(a) At the election of Buyer, by notice to JPE at any time if any of
Buyer's conditions precedent to Closing, as specified in Section 11.1 or 11.3
above, has not been satisfied as of the Closing Date or has at any time become
incapable of being satisfied by the Closing Date.
(b) At the election of JPE, by notice to Buyer, if any of JPE's conditions
precedent to Closing, as specified in Section 11.2 or 11.3 above, has not been
satisfied as of the Closing Date or has at any time become incapable of being
satisfied by the Closing Date.
(c) At the election of JPE, by notice to Buyer, if JPE has entered into an
agreement or commitment to engage in an Alternative Acquisition in accordance
with Section 12.5 below as evidenced by the execution of a definitive agreement
with respect thereto.
(d) If this Agreement terminates in accordance with this Section 12.1, it
shall be null and void and have no further force or effect; provided, however,
that Sections 12.2, 12.3 and 13.10 below shall remain fully binding. The
parties' rights under this Section 12.1 are cumulative and are in addition to
the other rights and remedies available to them under Sections 12.2, 12.3, 12.4
and 12.5 below, any other provision of this Agreement, the Related Agreements
and any other agreement or applicable Law.
12.2 Good Faith Costs. If Buyer terminates this Agreement pursuant to
Section 12.1(a) above due to the failure of the satisfaction of one or more
conditions precedent under Section 11.1 (other than Section 11.1(i) above) or
Section 11.3(c) above and JPE has failed to satisfy such condition precedent
within five (5) days after delivery by Buyer to JPE of notice of the lack of
satisfaction of such condition precedent, Buyer shall be entitled to payment
from the JPE Companies (or their successors and assigns) of its out-of-pocket
costs and expenses incurred in connection with proceeding with this Transaction
(including Fees and Expenses and costs involved in Buyer's Due Diligence
Investigation, and the entering, performing and executing this Agreement)
beginning on February 18, 1999; provided, however, that Buyer shall not be
entitled to such costs in excess of $300,000. Buyer's rights under this Section
12.2 are cumulative and are in addition to the other rights and remedies
available to it under Section 12.1 above and Sections 12.3 and 12.4 below, any
other provision of this Agreement and the Related Agreements, and any other
agreement or applicable Law.
12.3 Break-Up Fee. If, under any circumstance other than the failure of
Buyer to fulfill the conditions precedent under Section 11.2 above, the
Transaction contemplated by this Agreement is not consummated and JPE or its
shareholders enters into an agreement or commitment to engage in an Alternative
Acquisition on or prior to the one year anniversary of this Agreement which is
thereafter consummated, the JPE Companies (or their successors) shall pay Buyer
a fee of $500,000.00, less 50% of any costs paid to Buyer pursuant to Section
12.2 above. Buyer's rights under this Section 12.3 are cumulative and are in
addition to the rights and remedies available to it under Sections 12.1, and
12.2 above, Section 12.4 below, any other provision of this Agreement and the
Related Agreements, and any other agreement or applicable Law.
12.4 Equitable Remedies. The obligations of Buyer, on the one hand, and
JPE, on the other hand, under this Agreement are of a special and unique
character and the failure to perform such obligations under this Agreement by
Buyer, on the one hand, or JPE, on the other hand, shall cause irreparable
injury to the other party, the amount of which would be extremely difficult, if
not impossible, to estimate or determine and which may not be adequately
compensable by monetary damages alone. Therefore, any injured party shall be
entitled, as a matter of course, to an injunction, restraining order, writ of
mandamus or other equitable relief from any court of competent jurisdiction,
including specific performance, restraining any violation or threatened
violation of any term of this Agreement or any Related Agreement, or requiring
compliance with or performance of any obligations under this Agreement, or
requiring compliance with or performance of any obligations under this Agreement
or such Related Agreement, by the violating party or parties, or such other
persons as a court of competent jurisdiction may order. The parties' rights
under this Section 12.4 are cumulative and are in addition to the rights and
remedies otherwise available to them under Sections 12.1, 12.2 and 12.3 above
and Section 12.5 below, any other provision of this Agreement and the Related
Agreements, and any other agreement or applicable Law.
12.5 No Shop. For a period beginning with the date of this Agreement and
ending on the Closing Date, no JPE Company shall (and each JPE Company shall
prohibit its respective representatives, officers, directors, employees,
attorneys or agents from), directly or indirectly, initiate, solicit, encourage,
participate in, negotiate, or provide any information to any person or entity
concerning, or taking any action to facilitate the making of, any offer or
proposal which constitutes or is reasonably likely to constitute an Alternative
Acquisition or any inquiry with respect thereto. Notwithstanding the foregoing,
JPE may provide access and furnish information concerning its businesses,
Properties or Assets to any corporation, partnership, person or other entity or
group pursuant to an appropriate confidentiality agreement, and may negotiate
and participate in discussions and negotiations with such entity or group
concerning an Alternative Acquisition (a) if such entity or group has submitted
a bona fide written proposal for an Alternative Acquisition to the Board of
Directors of JPE relating to any such transaction and (b) if, in the good faith
determination of the Board of Directors of JPE, the failure to provide such
information or access or to engage in such discussions or negotiations would be
inconsistent with their fiduciary duties under applicable Law, after
consultation with Xxxxxx Xxxxxxx PLLC. Each JPE Company shall promptly notify
Buyer of any inquiry or proposal for an Alternative Acquisition (including,
without limitation, the terms and conditions thereof and the identity of the
person making it) and will provide Buyer with a copy of any written proposal for
an Alternative Acquisition. Notwithstanding the foregoing, nothing in this
Section 12.5 shall be construed to limit the obligations of Starboard or Plastic
Trim in connection with its respective pending bankruptcy proceeding. Any
violation of this Section 12.5 by any JPE Company shall entitle Buyer to damages
and remedies under Sections 12.2, 12.3 and 12.4 above in addition to any other
rights and remedies available to Buyer under this Agreement and the Related
Agreements, and any other agreement or applicable Law.
13. Miscellaneous.
13.1 Notices. Any notice required or permitted to be given under this
Agreement must be sent by (a) recognized overnight courier (such as Airborne or
Federal Express), (b) by certified or registered mail, postage prepaid or (c) by
facsimile, with confirmation of transmission by the sender's machine, followed
by further notice under (a) or (b) above the following business day, as follows:
(a) to Buyer: ASC Holdings LLC
Xxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
and to: Kojaian Holdings LLC
0000 X. Xxxxxxxx Xxx., Xxxxx 000
Xxxxxxxxxx Xxxxx, XX 00000
Attn: C. Xxxxxxx Xxxxxxx
Facsimile: (000) 000-0000
with a copy to: ASC Holdings LLC
Xxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
and to: Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx
0000 Xxxxx Xxxxxxxx Xxxxxxxx
Xxxxxxx, XX 00000
Attn: G. Xxxxx Xxxxxx
Facsimile: (000) 000-0000
(b) to JPE: JPE, Inc.
000 Xxxxxxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Xxxxxxx Chrysler
Facsimile: (000) 000-0000
with a copy to: Xxxxxx Xxxxxxx PLLC
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxx
Facsimile: (000) 000-0000
Notice shall be considered given (i) the next business day upon sending by a
recognized overnight carrier, (ii) three business days after deposit with
certified or registered mail or (iii) the next business day upon transmission by
facsimile.
Addresses for notices may be changed by notice given pursuant to this Section
13.1.
13.2 No Waiver. No waiver of any breach of any provision of this Agreement
or a Related Agreement shall be deemed a waiver of any preceding or succeeding
breach or of any other provision of this Agreement or a Related Agreement. No
extension of time for performance of any obligations or acts under this
Agreement or a Related Agreement shall be deemed an extension of the time for
performance of any other obligations or acts under this Agreement or a Related
Agreement.
13.3 Successors and Assigns. This Agreement shall bind and inure to the
benefit of the parties and their successors and assigns; provided that (a) JPE
shall not assign (including by operation of law) this Agreement, any Related
Agreement or any rights under this Agreement or any Related Agreement to any
other person and (b) each of ASC and Kojaian shall have the right to assign
(including by operation of law) this Agreement and the Related Agreements only
to (i) any direct or indirect wholly-owned subsidiary of ASC or Kojaian (as
applicable), (ii) to any entity wholly owned by the ASC Owners or Kojaian Owners
(as applicable), (iii) individually to the ASC Owners and Kojaian Owners (as
applicable) or (iv) any combination of clauses (i)-(iii).
13.4 Severability. The provisions of this Agreement shall be deemed
severable, and if any provision or part of this Agreement is held illegal, void
or invalid under applicable Law, such provision or part may be construed or
deemed changed by a court of competent jurisdiction to the extent reasonably
necessary to make the provision or part, as so construed or changed, legal,
valid and binding. If any provision of this Agreement is held illegal, void or
invalid in its entirety, the remaining provisions of this Agreement shall not in
any way be affected or impaired but shall remain binding in accordance with
their terms.
13.5 Entire Agreement; Amendment. This Agreement and the Related
Agreements, including the Schedules and the Exhibits to this Agreement and the
Related Agreements, contain the entire agreement of the parties with respect to
the purchase and sale of the Shares and the remainder of the other Transaction,
and no representations made by any party may be relied on unless set forth in
this Agreement or the Related Agreements (including the Exhibits and Schedules
to this Agreement and the Related Agreements). This Agreement may be altered or
amended only by an instrument in writing, duly executed by ASC, Kojaian and JPE.
This Agreement and the Related Agreements supercede and render null and void the
Letter of Intent.
13.6 Cost of Litigation. If any party breaches this Agreement or any
Related Agreement and if counsel is employed to enforce this Agreement or a
Related Agreement, the successful party shall be entitled to Fees and Costs
associated with such enforcement.
13.7 Interpretation. This Agreement and the Related Agreements are being
entered into among competent and experienced business persons, represented by
counsel, and have been reviewed by the parties and their counsel. Therefore, any
ambiguous language in this Agreement or any Related Agreement shall not
necessarily be construed against any particular party as the drafter of such
language.
13.8 Counterparts. This Agreement may be executed in any number of
counterparts (by facsimile transmission or otherwise), each of which when so
executed shall be deemed an original, but all of such counterparts together
shall constitute one and the same instrument.
13.9 Applicable Law; Venue. This Agreement shall be construed in accordance
with and governed by the laws of the State of Michigan without regard to
principles of conflicts of law. The parties acknowledge that the United States
District Court for the Eastern District of Michigan or the Circuit Court for the
County of Washtenaw shall have exclusive jurisdiction over any case or
controversy arising out of or relating to this Agreement and the Related
Agreements and that all litigation arising out of or relating to this Agreement
and the Related Agreements shall be commenced in the United States District
Court for the Eastern District of Michigan or in the Washtenaw County Circuit
Court.
13.10 Expenses. Except as otherwise provided in this Agreement or the
Related Agreements, each party shall bear its own expenses in connection with
the Transaction, including costs and expenses of its or his respective
attorneys, accountants, consultants and other professionals.
13.11 Further Assurances. If at any time after the execution of this
Agreement, Buyer or JPE reasonably considers or is advised that any further
actions, assignments or assurances on its or his part are necessary or desirable
to carry out the intent and accomplish the purposes of this Agreement and the
Related Agreements, it shall, at its own expense, take such actions, execute and
make all such assignments and assurances and do all things necessary or
appropriate to carry out the intent and accomplish the purposes of this
Agreement and the Related Agreements.
14. Transaction Fee. In addition to all other rights and remedies afforded
to Buyer, in the event the Final Actual EBITDA fails to exceed $34.3 million
(subject to the equitable adjustments set forth in Section 3.2(c) above), JPE
shall pay a fee to Buyer, equal to fifty percent (50%) of the difference between
$34.3 million minus the Final Actual EBITDA; provided, however, that such fee
shall in no event exceed $1,150,000.
15. Post-Closing Covenants. Until the third anniversary of the Closing
Date, (a) JPE shall maintain the existing provisions of its Articles of
Incorporation and Bylaws regarding the indemnification of the directors and
officers of JPE and (b) JPE shall obtain and maintain directors' and officers'
liability insurance covering past and current officers and directors in
accordance with Schedule 15 to this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
set forth in the introductory paragraph of this Agreement.
ASC HOLDINGS LLC.,
a Michigan limited liability company
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President/CEO
KOJAIAN HOLDINGS LLC.,
a Michigan limited liability company
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President
JPE, INC.,
a Michigan corporation
By: /s/ Xxxxxxx X. Chrysler
----------------------------------------
Name: Xxxxxxx X. Chrysler
Title: President
/s/ Xxxxxxx X. Chrysler
--------------------------------------------
Xxxxxxx Chrysler,
for the sole purpose of agreeing to fully
cooperate with the JPE Companies in connection
with Sections 6.2(e) and 11.1(g) above.
/s/ Xxxxxxx Xxxxxxxx
--------------------------------------------
Xxxxxxx Xxxxxxxx,
for the sole purpose of agreeing to fully
cooperate with the JPE Companies in connection
with Sections 6.2(e) and 11.1(g) above.
